3 ms·

It's expensive to be poor.

by rozap 3y ago

theshrike79 3y ago
Money follows money, that's how it works. If someone invests 100€ and makes 1% of profit, they got an extra 1€. You can maybe buy a cup of coffee with it. But if a someone invests a million euros and gets 1% of profit, they get 1000€. That's a cup of coffee every day for almost 3 years. Exact same investment, very different outcomes.
- stevezsa8 3y ago
  1% of a million is 10k. But your point is still valid :]
- RetroTechie 3y ago
  More to the point: living expenses. If someone starts out with $10k, invests at 5%/y, that's $500/y added. If that person's rent + food + utility bills are $1000/month, that $500/y is 'peanuts', and other income (like regular job) is needed to make ends meet long-term. (ignoring inflation for simplicity) But if starting with $100k, 5% is $5k/y which would cover 5 months/year living expenses. And no worries about losing a job. Starting with $1m, that's $50k/y interest, or all living expenses covered, no need to have a job, AND $38k/y left over to increase capital or do fun stuff. That's apart from effect of increases in the cost of living. So very different effect even if interest % and all else equal. Moving up the ladder from $1k -> $10k -> $100k etc as savings, can take a loooonng time (if possible at all).
- chii 3y ago
  > Exact same investment, very different outcomes. not exactly the same. The quantity is itself a difference. All investments would have a risk. The $1million investment has 1000x the risk, and thus, they obtain 1000x the reward. So, the weighted reward for both situations are the same per dollar.
  - theshrike79 3y ago
    Yes, that is true if you're assuming the exact same risk for both situations. The one with 100€ won't have access to investment consultants or private banking. Maybe a few youtube videos. The one with 1M€ will have an accountant, private banking access and unless they found the 1M€ off the street they'll have contacts for investment tips the other person will never have. I'm not a millionaire, but I do kinda know a few who could be measured as such. I've made good money following investment tips from them. Not life-changing, but fancy vacation amounts.

It's expensive to be poor.

by rozap 3y ago

It's expensive to be poor.

Money follows money, that's how it works. If someone invests 100€ and makes 1% of profit, they got an extra 1€. You can maybe buy a cup of coffee with it. But if a someone invests a million euros and gets 1% of profit, they get 1000€. That's a cup of coffee every day for almost 3 years. Exact same investment, very different outcomes.

stevezsa8 3y ago
1% of a million is 10k. But your point is still valid :]
RetroTechie 3y ago
More to the point: living expenses. If someone starts out with $10k, invests at 5%/y, that's $500/y added. If that person's rent + food + utility bills are $1000/month, that $500/y is 'peanuts', and other income (like regular job) is needed to make ends meet long-term. (ignoring inflation for simplicity) But if starting with $100k, 5% is $5k/y which would cover 5 months/year living expenses. And no worries about losing a job. Starting with $1m, that's $50k/y interest, or all living expenses covered, no need to have a job, AND $38k/y left over to increase capital or do fun stuff. That's apart from effect of increases in the cost of living. So very different effect even if interest % and all else equal. Moving up the ladder from $1k -> $10k -> $100k etc as savings, can take a loooonng time (if possible at all).
chii 3y ago
> Exact same investment, very different outcomes. not exactly the same. The quantity is itself a difference. All investments would have a risk. The $1million investment has 1000x the risk, and thus, they obtain 1000x the reward. So, the weighted reward for both situations are the same per dollar.
- theshrike79 3y ago
  Yes, that is true if you're assuming the exact same risk for both situations. The one with 100€ won't have access to investment consultants or private banking. Maybe a few youtube videos. The one with 1M€ will have an accountant, private banking access and unless they found the 1M€ off the street they'll have contacts for investment tips the other person will never have. I'm not a millionaire, but I do kinda know a few who could be measured as such. I've made good money following investment tips from them. Not life-changing, but fancy vacation amounts.