Why do the rich get richer?

[ThePoint]

I’ve heard this saying thrown around a lot. But I am wondering why the rich get richer?

People say that going from 10k-100k is harder than 100k-1 million, and that 100k-1million is easier than going from 1 million-10 million. But why? 

What is involved in the rich getting richer? What do they do to get richer? 

[Yarco]

Inertia, critical mass.

How do the top Youtubers gain hundreds of thousands of new subscribers a month? When someone with 100 or 1,000 subscribers struggles to double their subscribers in a year, while putting in more effort?

Once you hit a certain size, your fans and customers start doing your advertising for you for free, via word-of-mouth. People start writing news articles about you and giving you free publicity. It becomes a self-fulfilling prophecy.

Earning your first $1 -- Finding anything that works and doing it
Earning your first $100 -- Replicating what you did to earn your first $1 a hundred more times
Earning your first $1,000 -- Finding a way to increase the price that you charge, or the amount of work that you do
Earning your first $10,000 -- Developing a repeatable system that provides consistent results
Earning your first $100,000 -- Optimizing your system and making the most out of your time/effort
Earning your first $500,000 -- Automating your system and taking yourself out of the equation. Breaking free of the constraints of time and the 24-hour day. Hiring people to do your work for you.
Earning your first $1,000,000 - Making your money start to work for you and earn its own money.

IMO the hardest step is automating. Going from being 1 guy with a food truck who works 12 hours a day, to opening a restaurant. Or going from being a solo painter or landscaper, to having a team of painters or landscapers working in a company below you and moving to a management / admin / lead gen role. There's 10x more stuff to learn than any other step... mostly around how to manage your staff and maintain your same level of quality without having to do the work yourself. 

Once you can make one successful business, then you can essentially just franchise it, expand and open more locations across the country. At some point then you can outsource even the leadership and hire a CEO, and just become a faceless shareholder, where most of the employees in the company don't even know your name. If your CEO is good then you're totally hands-off and just have a call once a quarter for him to tell you how much more money you're making than last quarter, give him his $1M bonus while you take $100M. Then while your first successful business is making money on autopilot, you have all your time back to go and build another entirely different business up, and another, and another. And a lot of the business skills will transfer over, so you already know 90% of what to do.

Then when you have a whole portfolio of different companies under the umbrella of your mega holding company, you don't even have to start the new companies yourself any more. You just come up with business ideas and provide the funding, then pay people to go implement them from start to finish. Or invest in / buy up promising-looking new companies.

Business is basically just Cookie Clicker IRL lul

Edited October 3, 2022 by Yarco

[The Mystical Man]

"The basic rule of the psychic universe is that “like attracts like.” Similarly, “love promotes love,” so that the person who has let go of a lot of inner negativity is surrounded by loving thoughts, loving events, loving people, and loving pets. This phenomenon explains many scriptural quotations and common sayings that have puzzled the intellect, such as, “The rich get richer and the poor get poorer,” and “Those who have, get.” As a general rule, therefore, people who are carrying the consciousness of apathy bring poverty circumstances into their lives, and those with a prosperity consciousness bring abundance into their lives."

Hawkins, David R.. Letting Go (p. 19). Hay House. Kindle Edition. 

"If we hold in mind that we are small and unworthy, we elicit those kinds of responses from others, whose remarks tend to indicate that we are small and unworthy. If we think we are only worth a crust of bread, then that is what we will get. This is what the scriptures mean by the statement, “The poor get poorer and the rich get richer.” Poverty on any level, not just financial, comes from inner poverty, just as outer wealth comes from inner wealth. If we want others to stop being critical of us and attacking us, the answer is to begin letting go of guilt and all the feelings that have brought it about."

Hawkins, David R.. Letting Go (pp. 261-262). Hay House. Kindle Edition. 

Edited October 3, 2022 by The Mystical Man

[Alexop]

When you don`t have strict regulations on the system, you basically get the law of the jungle, the winner takes all, that is why. Exactly like the alpha chimp who get all the females and good food.

[universe]

Why shouldn't they?

If you are someone who is good at cooking, how likely are you going to cook more in the future?

When you are good at drawing, if you stick with it, you will become better.

While it's not a given, it's still very natural.

 

[Michal__]

The only way to know TRULY understand why this is the case you have to get into a state where reality is very malleable. 

Either do a kasina retreat - 100 - 200 hours of concentration-vizualization in like two weeks.

Or get there with psychadelics.

[Majed]

@ThePoint i do not know for sure, but i think that it is because of why they got rich in the first place. i think that to become rich you have to have a big impact on the world. adding a lot of value and having mastery in something. so it is really about the skill that you develop. for example if you are a musician than it is the skill of making good music that people love, as well as skills in marketing, sales, business and money management. it is the same thing as saying why do conscious sages keep getting more conscious, well they have mastered meditation or yoga or whatever technique. or saying why pick up artist keep getting better at picking up women, well they have mastered the art of picking up girls and attraction. fundamentally it is about finding something you enjoy doing and keep doing it until you become really good at it, it applies also to making money or investing, etc... there is a million different way to make money

Edited October 3, 2022 by Majed

[Consept]

Money makes money, more money makes more money 

[Gesundheit2]

It's a loophole in the system, caused by the corruption and selfishness of mankind. But it kinda allows the stronger/smarter/healthier chimps to control the weaker/dumber/sicker ones, so it's not completely useless.

[Ulax]

On 02/10/2022 at 11:28 PM, ThePoint said:

I’ve heard this saying thrown around a lot. But I am wondering why the rich get richer?

People say that going from 10k-100k is harder than 100k-1 million, and that 100k-1million is easier than going from 1 million-10 million. But why? 

What is involved in the rich getting richer? What do they do to get richer? 

Hmmm, I'd say because the rich own almost all the assets in society. Lower economic classes tend to own hardly an assets in comparison. Assets tend to continuously increase in value over time. To my understanding, the value of assets is known as wealth. So, the rich are very wealthy, and that wealth, relative to the wealth of lower economic classes, is under most economic structures constantly increasing.

I think that this constant increase of value of assets also causes inflation to rise. Meaning the value of 1 unit of currency decreases.

The money pool of the poor then is therefore essentially decreasing in value to compensate for the increase in value of the assets that the rich have.

Hence, inequality continues to grow between the economic power of the rich and the poor.

I think governments then have to regulate all this somehow.

However, there is a lot of corruption in this process of regulation. And also the democratic process is corrupted by all sorts of things like manipulative marketing, further corruption, lobbying, voter suppression etc. So, the public are rendered unconscious of what is actually happening in their country and why they seem to have less economic power than they used to. An example would be scapegoating. To my understanding, many right wing governments will scapegoat a certain section of the population for issues of inequality in society. Therefore, many people in lower classes therefore think there loss of economic power is due to these scapegoated groups and think its in their interests to get rid of them.

However, in the mean time the real causes of inequality continue to perpetuate.

For me the hope is that then you have more conscious political actors to come in, and try and actually address the root issues. Whilst also being very strategic in doing so, such that they can actually gain, hold and retain enough power to actually fix the issues. 

I don't have a super solid understanding of economics. But i've pieced this together from what I've heard.

[something_else]

Another aspect is that richer people can afford to take bigger risks. If you have 100k in the bank you can afford to throw 5k into an investment that has a 75% chance of losing you the entire 5k, but a 25% chance of making you 50k. If you have 5-10k in the bank, that kind of risk is essentially out of the question. Obviously it's not as simple as this in reality but the principle is roughly accurate.

[ThePoint]

On 10/6/2022 at 6:51 AM, Consept said:

Money makes money, more money makes more money 

@Consept That is part of my question - Why does more money make more money? In what ways does more money make more money?

23 hours ago, something_else said:

Another aspect is that richer people can afford to take bigger risks. If you have 100k in the bank you can afford to throw 5k into an investment that has a 75% chance of losing you the entire 5k, but a 25% chance of making you 50k. If you have 5-10k in the bank, that kind of risk is essentially out of the question. Obviously it's not as simple as this in reality but the principle is roughly accurate.

@something_else @Consept If you did have 100k in the bank right now, what would you do with it? 

[ThePoint]

On 10/3/2022 at 2:45 PM, Yarco said:

Inertia, critical mass.

How do the top Youtubers gain hundreds of thousands of new subscribers a month? When someone with 100 or 1,000 subscribers struggles to double their subscribers in a year, while putting in more effort?

Once you hit a certain size, your fans and customers start doing your advertising for you for free, via word-of-mouth. People start writing news articles about you and giving you free publicity. It becomes a self-fulfilling prophecy.

Earning your first $1 -- Finding anything that works and doing it
Earning your first $100 -- Replicating what you did to earn your first $1 a hundred more times
Earning your first $1,000 -- Finding a way to increase the price that you charge, or the amount of work that you do
Earning your first $10,000 -- Developing a repeatable system that provides consistent results
Earning your first $100,000 -- Optimizing your system and making the most out of your time/effort
Earning your first $500,000 -- Automating your system and taking yourself out of the equation. Breaking free of the constraints of time and the 24-hour day. Hiring people to do your work for you.
Earning your first $1,000,000 - Making your money start to work for you and earn its own money.

IMO the hardest step is automating. Going from being 1 guy with a food truck who works 12 hours a day, to opening a restaurant. Or going from being a solo painter or landscaper, to having a team of painters or landscapers working in a company below you and moving to a management / admin / lead gen role. There's 10x more stuff to learn than any other step... mostly around how to manage your staff and maintain your same level of quality without having to do the work yourself. 

Once you can make one successful business, then you can essentially just franchise it, expand and open more locations across the country. At some point then you can outsource even the leadership and hire a CEO, and just become a faceless shareholder, where most of the employees in the company don't even know your name. If your CEO is good then you're totally hands-off and just have a call once a quarter for him to tell you how much more money you're making than last quarter, give him his $1M bonus while you take $100M. Then while your first successful business is making money on autopilot, you have all your time back to go and build another entirely different business up, and another, and another. And a lot of the business skills will transfer over, so you already know 90% of what to do.

Then when you have a whole portfolio of different companies under the umbrella of your mega holding company, you don't even have to start the new companies yourself any more. You just come up with business ideas and provide the funding, then pay people to go implement them from start to finish. Or invest in / buy up promising-looking new companies.

Business is basically just Cookie Clicker IRL lul

@Yarco Good post. Thank you. So it sort of compounds on itself?

 

[Consept]

4 minutes ago, ThePoint said:

Why does more money make more money? In what ways does more money make more money?

There's the basic investment view of it in that if you did have 100k in the bank and put it in something that could make 10%, you'd make 10k that year. This can compound to more and more every year assuming you don't touch it. You could put 1k in the same investment and it wouldn't get near 100k, whereas if you had more money to invest you'd make even more. 

It's all about scale and a lot of times the more money you have the more you can scale up and the more money you can make. 

A lot of people would say if you have 100k in the bank you should invest in yourself in terms of skills, which is true, but this will also be an example of money making money as the money is giving you skills you can use to make money. 

Also the strange thing is that when you get more money things start getting cheaper. A great example is banks and credit card companies can actually pay you to spend and keep money with them, you can get discounts on things, you'll also be able to borrow money cheaply etc. This is because you have enough money where their business has to become competitive to get it. On the flip if you haven't got much money you can get charged more for borrowing or going over your account limit, so the gap can be very wide. 

[Yarco]

59 minutes ago, ThePoint said:

@Yarco Good post. Thank you. So it sort of compounds on itself?

 

Yes. Compounding interest on money is nice, but people don't realize that learning and knowledge also has compounding effects.

You can't take knowledge away from a person.

So if you take most multi-millionaires and forced them to start back at $0, they'd probably have a million again within a few years. (Assuming they're true entrepreneurs who earned their wealth and built up from nothing the first time, and not just trust funders.)

If I theoretically had the choice between all of a serial entrepreneur's money -- vs. -- gaining all of their knowledge, experience, and mindset, I'd always take their knowledge. You can always make more money.

Its like in an MMO game, even if you die and lose all your gear, you still retain all of those underlying levels and it's much faster and easier to build back up again than some noob starting at level 1.

[Bobby_2021]

Because the rich has control of the assets. It generates income which you can use to buy more assets.

You can afford to bet on a lot of opportunities as a rich person. Even one win will rake in millions 

The poor can't have that option. They can neither buy option nor money making opportunities.

Their struggles are paying rent and electricity bills and food. Their intellectual bandwidth is locked up with menial stuff. A vicious trap. 

[ThePoint]

@Yarco and @Consept

If you had to start all over, what would you do to become wealthy and achieve financial freedom? 

[at_anchor]

On 10/7/2022 at 1:09 PM, Bobby_2021 said:

Because the rich has control of the assets. It generates income which you can use to buy more assets.

You can afford to bet on a lot of opportunities as a rich person. Even one win will rake in millions 

The poor can't have that option. They can neither buy option nor money making opportunities.

Their struggles are paying rent and electricity bills and food. Their intellectual bandwidth is locked up with menial stuff. A vicious trap. 

A bit sad, but true. For the most part. 

Edited October 10, 2022 by at_anchor

[Yarco]

7 hours ago, ThePoint said:

@Yarco and @Consept

If you had to start all over, what would you do to become wealthy and achieve financial freedom? 

I would jump on trends earlier and take more risks. Especially early on with things that only require your time and little/no financial investment.

I felt like I was late to writing ebooks in 2017, but comparatively I was early and had at least a couple more years where it was the wild west. I would've gone all in and written hundreds of ebooks. Then I might be making thousands of dollars of passive income per month from them still today.

Getting involved too late --- I first learned about Bitcoin when it was like $20, and thought about buying a couple hundred dollars worth, but the process of buying it was too complicated and the darkweb stuff seemed sketchy, so I didn't. If I had bought $200 worth, it'd be worth $200k today at even the currently low prices.

Exiting too early --- I amassed 2.5 million dogecoin at one point buying from people on Reddit in the very early days with money from my tax refund, for maybe $2,000 in total. I left it on an old computer and forgot about it for years thinking it was basically worthless, until I saw it was peaking around $0.005. So I sold all of it for like $12,000.  If I held to anywhere near the peak when you started to hear about Dogecoin in the news and Elon Musk tweeting about it, it would've been worth over $1M. Even at today's prices it'd be worth $150k.

Exiting too late (and sometimes risks just don't pay off and ideas are duds)  --- I bought into NFTs early on thinking it was finally my chance, and now I'm still holding thousands of dollars worth of pretty much worthless NFTs at the moment. That's the risk you take though. You gotta take educated risks to get way ahead. But you can't take TOO large of risks either. Don't put 100% of your money into something, because you don't know what's the next Bitcoin and what's the next NFT. If you feel there's a really strong chance it'll blow up, I'd throw maybe 10% of my savings at it at most.

If you find something that looks like it has a solid chance to offer a 100x, 500x, 1000x reward for the time/effort/money you put in, go for it. (Assuming you're smart enough to tell when something is a scam or not.)

Right now I'm keeping an eye on writing AI because 1. It's going to eventually replace me as a freelance writer 2. When it gets good enough (it's not yet), I can be first to market and use it to pump out a couple hundred novels in a year. Writing AI might finally be my chance to shine and apply everything I've learned previously and make my millions. Or it might be another dud like NFTs, I'll invest hundreds of hours of my time into it and only make a couple hundred bucks, and then I'll be waiting 5 years for the next thing. But now I have the knowledge and mindset to take advantage of whatever the next thing is.

Maybe 5 or 6 times before you're 30 years old, you'll see an opportunity that you know will be the next big thing, like the next Tesla or Amazon. Don't be afraid to at least make a small bet on it. Those big chances only come around every few years.

Edited October 10, 2022 by Yarco

[ThePoint]

8 hours ago, Yarco said:

Exiting too late (and sometimes risks just don't pay off and ideas are duds)  --- I bought into NFTs early on thinking it was finally my chance, and now I'm still holding thousands of dollars worth of pretty much worthless NFTs at the moment. That's the risk you take though. You gotta take educated risks to get way ahead. But you can't take TOO large of risks either. Don't put 100% of your money into something, because you don't know what's the next Bitcoin and what's the next NFT. If you feel there's a really strong chance it'll blow up, I'd throw maybe 10% of my savings at it at most.

@Yarco Thanks for your post. Did you only hold them? You didn’t flip them?