Is the gap between the Poor and the Rich increasing?

When the Forbes first compiled the list of top 400 richest people on earth, their combined net worth was $93 billion, this was in 1982 while todays top richest 400 have combined net worth of around $ 2.3 trillion. That is increase of around 24 times in around 3 decades. While in the same period average houshold income rose only 2.8 times.

This fact gives the answer to the question as yes, the gap is increasing.

Let's do some brainstorming and ask some logical questions-

Q. Is it of any importance to us to think about it?

A. Of course yes, if we don't know where are we in the society and how the society dynamics works then we can not do anything to get to an advantageous position or benifit more from the social dynamics.

We can put our abilities for better use if we know how our society works.

Q. Why is the gap?
A. To answer this question we have to ask more questions-

Q. What does rich people do different than the poor?
A. They generally run the business or are investors or innovators or doing something very productive to the society or solving one or more problems of society. While poor people are doing the job for their employer and spending most or all their hard earned money.

Q. What are the advantages the rich have over the poor?
A. They have access to capital, access to intelligence, access to manpower and most importantly they make better use of these things than the poor does.

Q. Does the rich people deserve the money they earn?
A. Yes, they have earned their money in legal ways. Generally people buy their product because they are providing value. Generally they bring the revolutions or innovations to the society which make the living easy for the society. They provide the jobs for the most of the population. So they do deserve the money after doing all this.

So the gap is because of what people do. The rich do different things than the poor.

So the next question arises.

Q. Why was the gap narrow in the past and expanding since then?
A. Before the industrial revolution the gap was narrow because mostly the performance of everyone was linked to physical strength, which was almost equal. No one performed exceedingly better than other. The difference between the performance of the best performer and the least performer was very thin.

But then few people started using there brain more and invented things that made them perform much better, both in terms of quantity and quality, their efficiency was higher. For example use of steam power instead of muscle power. So obviously they received better compensation than others. And they deserved it.

Now the technology is much evolved and gives leverage to better ideas. Thoughts can now be converted in to reality more quickly than ever. For example if you want a kind of app on your smart phone which is not available on the playstore, and suppose you know how to make an app, then you can quickly make than app and if it is really usefull then quickly it will spread on internet like a wildfire, just like the facebook or twitter or whatsapp got popular quickly. As a result you will definitely get rewarded much more than if you were doing the same thing a century ago. People are also more receptive to change today than ever.

That is why the gap between the rich and poor is increasing. Basically it is the gap between the knowledgable and the average people.

So the most important question-

Q. What is the use of this knowledge of the difference between rich and poor to us?
A. This knowledge gives us the CHOICE, whether to be RICH OR POOR. To be poor you just have to keep doing your job under a boss. Or to be rich, you have to work on your ideas and leverage the one which give value to the society. Then you will be rewarded according to the value you gave.

Or you can also stand by or support good ideas and there by benifit in the success of that idea. For example if you purchase shares of a company providing value to the society with ethical business and ethical management.

There is one more way of leverage which anyone can use from like right now. That is THE POWER OF COMPOUNDING. We will learn about it in later post.

So with this knowledge of choice in our arsenal now we will end this question and answers session. We will meet soon, till then, Have a Nice Day..

Sumit
The POWER is when,
you use ODDS
to get EVEN..

How can I double my money in one month?

How or where can I double my money in one month? Which stock is gonna double in a month? These are the top two FAQs(Frequently Asked Question) by clients when I was a channel partner of a stock broking firm.

The name of this blog is Samanya Buddhi (Samanya means common, Buddhi means sense) which means common sense, which points towards logical thinking.

So lets do the logical thinking on the above FAQs.

How much money do you have in your wallet right now? What is the minimum amount of that money you can spare for investment? Don't worry, it can be anything, may be a quarter of a dollar or euro or rupee or any other currency.

So suppose you ask me that quastion and I recomend a company who's share will double in a month and you invest that quarter. The quarter gets doubled at the end of the month so you book your profit and ask me the same question again. And the same process is repeated again. Now you have a dollar or euro or rupee or any other currency you first invested.

Now suppose we go on like this, say 64 times, without taking out any money and in 64 monthes your money gets doubled 64 times. (64 months is only the period of 5 yrs and 4 months)

Now believe me, that amount will be more than all the currencies available on the earth.

Another thing is me too have the quarter to invest. ;-) So why didn't I do it myself?

This is the reasoning I used to to tell my clients. And they were like, "WHAT...???!!!! I thought you are a broker of this reputed firm.."

This happens because of Authority bias we have in our head. In simple terms we look for traits which point towards knowledge and intelligence and let that authority do the thinking for us which freed up our brain for other tasks. This trait was usefull in encient days when our ancestors used to stay in jungle. But now it is most of the time irrelavant. People were considering me as authority and asking me such question without doing their own thinking.

Watch out for it. Smart people like marketing person or advertisers take advantage of this fact for their own profit. (Ever seen any actor on TV dressed in doctors attire recommending some toothpaste??)

But the basic question still remains how to grow our investment and how much growth can we expect?

We will get to that in further posts. No hurry for now..

Sumit
The POWER is when,
you use ODDS
to get EVEN..