Economics_Troll

Economics_Troll t1_j2dq7qc wrote

Rich people (in general) rarely hold substantial sums of cash.

Cash gains you nothing, and actually loses value year to year due to inflation.

Even investing in bonds gets you 5% + annual returns right now, and if you're using leverage in new businesses you can see returns substantially above that with more risk.

This is where the "rich gets richer" theme comes from. If you've got $10 million, you can earn $500k per year (5% return) in a very low risk way. Once you have enough money, you can fund your lifestyle without touching your original money or working.

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