Originally published at: https://boingboing.net/2018/09/25/dynastic-fortunes-r-us.html
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And of course that wealth will trickle down to us peons… oh no you say it will just sit there and do nothing but gain interest and buy the occasional rolls royce.
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Yeah, what trickles down on us ain’t wealth…
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If the interest rates and bond yields were higher, the rich would be getting richer on those. This is not the fault of the stock market as such, but of generational wealth concentration and insufficient progressive and estate taxation.
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You’re correct about the underlying issues, but low interest rates and bond yields have accelerated things. They’ve prompted UHNWIs to make more speculative investments in the securities market, which they can afford to do without losing everything if the investment goes belly-up. Meanwhile, average investors with a lot less room for error feel the only way to beat inflation is to invest in those same risky securities, sometimes forgoing putting their money into bonds (because they also have a lot less room to diversify their meagre assets).
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Should be noted that the S&P 500 did over 18% in 2017, so anyone who bought an index linked ETF for example would have beat those family office 15% returns.
A family office is basically a lawyer (or two), an accountant (or two), and a money manager (or two) dedicated to the business of someone who can afford to personally employ them rather than share them with other people. They don’t have a huge advantage over similar services these people could get from separate firms.
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Just gonna squeeze this in before the “simply smart investors doing their thing” apologists show up…
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That’s pretty much the gist of Piketty’s “Capital In The 21st Century,” I think.
But in the U.S., I’m still more than a little annoyed that a paycheck for an honest day’s work is taxed more than financial gains (stocks, bonds, interest, whatever).
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Education as well.
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I’m retired and most of my savings in the stock market. I’m not that good of an investor but at least I recovered from the last crash and made some money. Right now I consider myself rich, but that’s got to last me a couple of decades (I hope) and god forbid I get cancer or end up in a nursing home.
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So yeah I can spare maybe $6000/year to invest in that for some minor returns. The rich folk mentioned here can invest that EVERY MOTHERFUCKING HOUR.
Yeah that is totally the same thing. /s
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Money comes to money, that’s a well-known thing; that’s why people use leverage while investing. But you should be able to get a respectable return via ETFs on that six thousand dollars, possibly even better percentage-wise than the rich people if their money managers are lazy. In absolute terms, of course, the people investing six million are going to beat you and me investing six thousand.
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So that’s why they call you LadyBrains…
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My point was that a family office in and of itself is not a money making machine. But of course it’s true that people with more money to invest will make more money making the same investments.
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The point is even most people can’t even manage that. $1200/year would be an amazing amount of investment for them and even long term it isn’t going to help that much especially if any medical or other emergency has you cleaning that back out before you retire.
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i can’t believe it’s 2018 and people still think money is real.
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Minus fees
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I don’t know about anyone else, but if I was rich enough to hire a dedicated money manager, I would be damn sure they weren’t some B-student.
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