3 ms·
> The rich are rich because of the compounding effects of wealth. Not that small fraction spent on durable goods. The less you (have to) spend on goods and ser
by throw0101c 3y ago
> The rich are rich because of the compounding effects of wealth. Not that small fraction spent on durable goods.
The less you (have to) spend on goods and services the more you can keep invested to compound.
If 100% (or more) of your income is taken up by paying for necessities (shelter, food, transportation), what do you have to compound?
* https://ofdollarsanddata.com/the-biggest-lie-in-personal-finance/ https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...
- jncfhnb 3y agoNo, this is the misleading thing. Which your article is largely agreeing with me on. The compounding effect of wealth scales with the amount of wealth you have more than the incremental savings you’re likely to earn. Trimming your expenses won’t make a difference. If you have no wealth and low income then the compounding is irrelevant. Even if your income is high it’s very hard to acquire “wealth”. Poor folks will be poor even if you chop their expenses by half.