I retired in January 2010 after working nearly fifty-years. Since January 2010 my income has not increased, it has decreased in real terms and in spending power because of inflation. In that respect I am like most retirees. Never living beyond (or at) our means my wife and I haven’t noticed the drop in income significantly.
All the talk of inequality got me thinking about how the wealthy get wealthier each year. More often than not their wealth grows from their investments in real estate and stocks and bonds, including reinvestment of interest and dividends.
Those options are available to almost everyone on one scale or another at one time or another.
I recently looked at my investments accumulated over a lifetime and found that while my income had decreased since January 2010, my net worth had grown by 45%. How could that happen? I don’t save any longer, I don’t work. The answer is simple and again available to mostly everyone who makes prudent choices during their lives.
My wealth has grown in several ways. The value of my home has increased slightly, the stock market has risen and hence the value of my mutual funds and couple of stocks has risen. I have reinvested all interest and dividends and they too have grown in value.
It hasn’t been a steady climb for sure. There were down years and a few scary moments causing second thoughts about my strategy, but the result is clear. The amount of money involved is not relevant, the process is and that process is available to anyone.
You and I may never be billionaires or multimillionaires, we may never start a new business or an entire industry or change the world or be an exceptionally savy investor, but we have (in my case had) the opportunity and that has not changed.
But there is one drawback; seizing every opportunities takes hard work, awareness, motivation, patience, determination, drive and more. I fear that those among us who buy into the fair share, system is rigged and anti-billionaire rhetoric may be lacking in those areas. Think about what that rhetoric says. Heavily tax those few who reach the very top; give the money to the government to redistribute as a few bureaucrats and politicians determine best; often in programs that provide disincentives to demonstrate the qualities I listed above.
But there is more. To keep all these programs running requires higher taxes on everyone. That means less and less money to spend as you determine, less to allow you to seize opportunities. Less reason to seize those opportunities. As a result, you have placed much of your life and what you can achieve in the hands of politicians.
Fearing, maligning and envying the billionaires seems misdirected and definitely not productive.
Categories: Observations on life