How Can a Man Be Rich if He Gives All His Money Away?
originally appeared on Quora: How can a man be rich if he is willing to give all his money away to the people who need it the most?
This is a common misconception that accumulation of wealth will make one rich. Oftentimes, keeping money to oneself will only end poorly. To become rich, a man has to in fact increase his money flow and put it to use. Thus the overused quote “make your money work for you”.
To compare between accumulating value and giving value is similar to comparing between mercantilism and capitalism. For the individual, accumulation of wealth works well only if your net worth is not much — that is referring to us the common folks.
Whereas for the rich man with net worth as much as the GDP of a country, keeping money to himself will most definitely erode his value. In order to keep value for any capitalist, he can do two things:
- increase cash flow (invest/donate/spend)
- provide value (work, produce, business)
“The only way to be really rich, is to share your wealth by investing it,” — Peter Schiff. We talking about Billions here.
Who needs money the most?
In capitalism, money already flows to those who really need it — those who are willing to do anything for it. This brings Oliver Twist and sweatshops to mind.
Obviously this is not a good thing. Therefore the government steps in to protect the civil rights of its people. Cue minimum wage and child labour prevention laws. This time, the government has to fill the void of the rich capitalist to provide money for these people because, well, who else will?
Why not make donations attractive? Incentivise donations by the rich to the poor. The government does just that.
If you invest your money in the stock market, you are also giving your money to those who need it. Small cap companies go public because they require funds to run. They sell their potential and the investor can buy them.
If you invest your money in the stock market, you are also giving your money to those who need it.
What’s in it for the rich man
Enough with economics. Now that we established that accumulation is misguided, let’s talk charity here.
You may be a student benefactor of a scholarship, donated by one of your state’s wealthy alumnus. Why?
Here’s why in brief:
- Bonds
- Favor economy
- Tax relief
- Marketing
- self-fulfilment? etc, many other benefits in giving…
The brilliant minds in school who are otherwise destined for greater things if not for their impoverished background are in need of the money. So the rich man funds them, while he stays rich.
Now suppose he gives all his money to donation, it is equivalent to going “all in” on a combination of the 5 listed items. He can stay rich by hoping for positive ROI.
One may argue, What? Nah, why can’t he just donate for charity? instead of all business?
The rich man’s reasons may be humanitarian, or it may be for business. But I like to think that he was a businessman first before he became rich.
Perhaps a better question would be, how can a man be a humanitarian first before becoming a rich businessman? These men are few and far between.