How I Stopped Working for Money and Made Money Work for Me and Why I Hate Myself for It
My ambivalent relationship with money, investing and wealth
“I am not working for money, my son. Money is working for me.”
I stop for a moment and let that thought sink in. My dog stops as well and looks annoyed at me because she doesn’t understand why we stop. I pause the audiobook and take out the earbuds, completely zooming out of this moment.
This statement from “Rich Dad, Poor Dad” by Robert T. Kiyosaki shook a fundamental in me. I have been working for money and I always thought that was the only way. But he is right, I can also make money work in my favour.
What the “rich dad” is telling little Robert with this simple statement, is that he used his money to buy assets that make money from itself, providing for all of the family’s needs.
That is such an amazing theory by making money and then investing it in index funds, shares or immobiles. They will escape inflation and provide a long-term income for you. And the compound effect will make them grow and grow and grow.
Amazing, I’ll do the same.
So I signed up with an online broker and made my first investments. Easy. It is not much yet, but I did the maths and over time, the compound interest will skyrocket.
The Global Challenge
Two weeks after this first investment I see a documentary about how the gap between poor and rich is drifting apart dramatically. But it is not just drifting apart.
1% of the global population, owns 45% of the world’s wealth. Let that sink in for a moment.
The thing that shocked me even more, is that 55% of the world’s population shares only 1,3% of the global wealth.
And this trend is only going to worsen. Why? Because of the compounding effect.
If you already have a large sum of money, the compound effect will make it bigger and bigger. However, when you only have a small amount, it will not grow that fast. And if you have no money in assets at all, inflation eats away your savings slowly, but surely.
That is why the rich will get richer and richer and the poor will just be poorer.
We are part of the problem
After reading this article I felt guilty. I want to make money by investing, buying shares in companies and letting my money work for me. Am I greedy like this 1,1% of the world’s population, not doing anything, but sitting on their ever-growing mountain of wealth, while the bottom 55% work off their asses to provide a living?
But what is the alternative? Not investing and getting poor, especially with the pension systems all over the world failing in the next years?
I don’t have an answer to these problems and the financial world is so complex that no one understands all the coherences.
But there was a second thought. Why can’t the problem also be the solution?
A way out?
This solution came up when I thought about what shares are in the first place. Shares are a little part of a company. And by dividing it into shares, the company does not belong to one person anymore, but to a collective of “shareholders”. So the company is not in the hands of a private person anymore.
Doesn’t that sound like the communist idea of getting rid of private property and making everything belong to everyone?
Of course not everyone owns the same amount of the company, but just as much, as the shares they have. So rich people will still be richer than poor, but the poor could start letting their money work for them too, given they have enough to invest.
And that might be the blind spot in my train of thought. I haven’t been born a millionaire, but my parents never struggled financially either. There was always food on the table and a roof above my head.
But at least in the Western world, we have enough security, to put some money to the side and save or invest. Don’t we? If we live frugally and focus only on fitting our basic needs, acknowledging that we don’t need that much after all?
Maybe these thoughts aren’t even my own, but an echo of the capitalist story we are all told.
I don’t have the answer, but I see the problem.
After looking into the distance for some seconds, my dog pulls on the leash. She pulls me out of my thoughts and back into this moment with her in nature. When I let her go from the leash, she ran into the field, sniffing, jumping, hunting butterflies and searching for sticks.
She is pure joy in these moments. She has no idea of what money is. She doesn’t care. She eats the same food every day and drinks nothing but water. The only important thing for her is to jump around the fields and cuddle when we get back home. She doesn’t need anymore to be happy.
Why do we make this world more complicated than it needs to be?
Have a great day.
Matteo