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Articles like this are evidence that people are still surprised that capital grows faster than labour. At least in fair capitalist society the surest way to be
by kulkarnic 11y ago
Articles like this are evidence that people are still surprised that capital grows faster than labour. At least in fair capitalist society the surest way to become wealthy (statistically speaking) is to understand:
- The total wealth of the world is expected to keep increasing
- Capital grows faster than labour
- Taxes and disasters redistribute wealth
This is why investing in index funds that don't pay dividends is such a good idea.
- eloff 11y agoOT: If an index fund doesn't pay dividends, what happens to the dividends? Presumably the fund owns shares in every stock in the index, so there should be dividends? Does it just go towards paying the fund overheads? What about for an ETF index fund?
- kulkarnic 11y agoI misphrased above. The index fund will pay out a dividend if the underlying stocks do. Fortunately for investors, Companies are paying dividends less and less frequently, preferring to do stock buybacks (which improve the stock value) instead. Dividends are also "qualified" if you've held the stock long enough, so you pay the lower capgains rate.
- garry 11y agoDividends and stock buybacks are both ways companies enrich their stock holders. But I view them as largely the same thing. When a company doesn't have new markets, then it doesn't create new products or services, so it literally doesn't know what to do with the money, so it just plows it back to shareholders, and these are just two ways that happen.
- klipt 11y agoBuybacks are much more tax efficient though. If you would have reinvested all dividends (after paying taxes on them), with a buyback you instead do nothing and pay no tax.
- adamlett 11y ago> stock buybacks (which improve the stock value) That's a misconception. Stock buybacks create value only if the stock is undervalued.
- garry 11y agoCapital only grows if it can be deployed in new endeavors that generate more revenue (and as a by-product usually increase the amount of labor at work). That's part of the problem. Not enough public companies know what to do with the excess cash, and therefore don't end up creating more value.
- WalterBright 11y agoCompanies with excess cash do not store currency in a vault. They invest it, usually in short term investments convertible to cash, but investments nevertheless.
- ak39 11y agoThat you need millions to make bajillions? Doubt that folks are surprised ... angry may be. That first million requires hard-toil labour often deliberately prevented from ever being obtained by the same moneyed class. The only other practical way, like the article says, is to steal.
- wavefunction 11y ago>is to steal That's an unpopular opinion here on HN but I would agree, looking at the histories of great fortunes. I am including the "stealing" of wealth gained by under-compensating labor for its full value when I agree with you.