5 ms·

This is a great definition of what I consider to be the 'poor tax'.. Not to mention if they ever get un-poor they don't have the knowledge to 'build wealth' un

by redorb 6y ago

This is a great definition of what I consider to be the 'poor tax'.. Not to mention if they ever get un-poor they don't have the knowledge to 'build wealth' until they start slowly learning it or from a mentor. We would better off teaching 'home finances, interest and banking' classes instead of Algebra 3 or geometry 2 (for 99% of people)

zouhair 6y ago
That's the only way to have billionaires. They have to take the money where it is, mostly in poor people's pockets.
- omilu 6y ago
  Presumably they make things of value to get rich, which is why we enjoy the standard of living we all do.
dlhavema 6y ago
Very true
rjbwork 6y ago
Define "we". Many a rich man was made by picking a poor man's pocket.
CarbyAu 6y ago
Agreed. It is crazy that for a standard "Savings" account: - interest earned is less than inflation. - I pay tax on that interest earned. "Saving" money in a common savings bank account pisses away value. Many people are not capable of more financial management capability. The middle class is often locked into a mortgage - I am too! - and is barely one step up. But it is one step up. Ultimately, poor people don't own things that make money. They are not "rent seekers". They don't own stocks or real estate or anything else where the simple act of ownership makes money.
- ip26 6y ago
  I'm not a finance guy but I suspect it's axiomatic that you can't keep up with inflation without taking any risk. Like a law of economics.
  - CarbyAu 6y ago
    I will admit I have little financial management knowledge myself. I am inclined to agree with you, but what is the bank doing with the money you keep there? Isn't the bank meant to be using your money in a "managed fund" like manner? IE leverage it to make profits. Here in Australia the banks make quite decent profits, and yet a savings account can't break even, before tax?!? I haven't done the sums but I am curious if it is better to own shares in the bank than put money in the bank. I am also inclined to ensure my son does get financial knowledge. It is hard to play a game you know only limited rules of.
    - econcon 6y ago
      Bank also makes money on transaction fees (both merchant and account holder side) which is something bank account owners don't make.
  - schrodinger 6y ago
    Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time. Although I guess you can argue that "tying up" the money is a form a risk, and almost certainly a luxury some poor people cannot afford.
    - econcon 6y ago
      >Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time It's not risk free, there is nothing that stops government from creating inflation so they can pay off the debt for in inflated dollars. Today, central bank alone doesn't have power to make create money out of thin air. Government guaranteeing loans from banks to corporate players and projects is creating inflation. It's good for politicians as they can pay off their expensive mistakes in cheap money.
causehealth101 6y ago
It's a sad state of affairs. There are far more resources available these days to combat the information asymmetry that drives the "financial planning" industry, but it's not nearly enough to help the people who actually NEED it. I began my career in private wealth management (minimum $5M investable assets). I ditched that to try to help real people...joined a brokerage where I discovered sales targets still required $250K, at the very least, in investable assets (this excludes include home and any assets that cannot be held by the brokerage, so the net worth of these people was usually $500K+). I finally gave up and attempted to run a business on a different fee model to educate lower/lower-middle class people on their finances. The Great Recession and my youthful idealism & naivete destroyed that.

by redorb 6y ago

zouhair 6y ago

That's the only way to have billionaires. They have to take the money where it is, mostly in poor people's pockets.

omilu 6y ago
Presumably they make things of value to get rich, which is why we enjoy the standard of living we all do.

dlhavema 6y ago

Very true

rjbwork 6y ago

Define "we". Many a rich man was made by picking a poor man's pocket.

CarbyAu 6y ago

Agreed. It is crazy that for a standard "Savings" account: - interest earned is less than inflation. - I pay tax on that interest earned. "Saving" money in a common savings bank account pisses away value. Many people are not capable of more financial management capability. The middle class is often locked into a mortgage - I am too! - and is barely one step up. But it is one step up. Ultimately, poor people don't own things that make money. They are not "rent seekers". They don't own stocks or real estate or anything else where the simple act of ownership makes money.

ip26 6y ago
I'm not a finance guy but I suspect it's axiomatic that you can't keep up with inflation without taking any risk. Like a law of economics.
- CarbyAu 6y ago
  I will admit I have little financial management knowledge myself. I am inclined to agree with you, but what is the bank doing with the money you keep there? Isn't the bank meant to be using your money in a "managed fund" like manner? IE leverage it to make profits. Here in Australia the banks make quite decent profits, and yet a savings account can't break even, before tax?!? I haven't done the sums but I am curious if it is better to own shares in the bank than put money in the bank. I am also inclined to ensure my son does get financial knowledge. It is hard to play a game you know only limited rules of.
  - econcon 6y ago
    Bank also makes money on transaction fees (both merchant and account holder side) which is something bank account owners don't make.
- schrodinger 6y ago
  Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time. Although I guess you can argue that "tying up" the money is a form a risk, and almost certainly a luxury some poor people cannot afford.
  - econcon 6y ago
    >Isn't a government bond basically equivalent to inflation? That would mean you have a risk-free way to get "inflation" returns, with the caveat that you can't access the money for a period of time It's not risk free, there is nothing that stops government from creating inflation so they can pay off the debt for in inflated dollars. Today, central bank alone doesn't have power to make create money out of thin air. Government guaranteeing loans from banks to corporate players and projects is creating inflation. It's good for politicians as they can pay off their expensive mistakes in cheap money.

causehealth101 6y ago

It's a sad state of affairs. There are far more resources available these days to combat the information asymmetry that drives the "financial planning" industry, but it's not nearly enough to help the people who actually NEED it. I began my career in private wealth management (minimum $5M investable assets). I ditched that to try to help real people...joined a brokerage where I discovered sales targets still required $250K, at the very least, in investable assets (this excludes include home and any assets that cannot be held by the brokerage, so the net worth of these people was usually $500K+). I finally gave up and attempted to run a business on a different fee model to educate lower/lower-middle class people on their finances. The Great Recession and my youthful idealism & naivete destroyed that.