Do you know what the biggest difference is between rich white men and poor white men (and everyone else for that matter)???
Well, financially speaking it boils down to one thing:
Stocks.
Seriously
the stock market is the biggest difference between the rich and the
poor, of which the majority of wealth in North America is owned by
rich
white men.
- Jeff Bezos
- Bill Gates
- Mark Zuckerberg
- Warren Buffett
- Elon Musk
- Etc
It is a long list of rich white men, sprinkled with the rare woman like Alice Walton.
Or the rare person who isn't white and male.
And what do they all have in common?
Stocks.
Most of their networth is based on how many stocks they own in valuable companies.
Companies like PayPal, which is basically a bank, and it is mostly owned by Elon Musk.
And here's the rub...
- Stocks go up in value.
- Stocks pay dividends on the company's earnings.
- The government doesn't really tax stocks the same way we tax normal income. It is almost completely tax free.
- If you're rich enough you can borrow against the value of your stocks.
Thus
we're talking about rich people who don't pay income taxes like the
rest of us, borrow money against the value of their stocks so they never
have to cash them in, and they are making hand over fist as the stocks
continue to go up in value plus pay
stock dividends.
There are many types of stocks too.
Growth stocks, which go up dramatically over time.
Dividend stocks, which go up and down, but pay you a share of the earnings every year, every quarter, or sometimes even every month.
Growth/Dividend stocks which do both at the same time.
And in order to be financially stable many people diversify their stock portfolios so they have a little bit in
tech stocks like Google, Apple, Shopify, etc, a little bit in
mineral mining (eg. gold, silver, copper, etc), a little bit in
ETFs, specific retail stores, etc.
So let's pretend that you invest in growth stocks, and your stocks go up (on average) in value 10% per year.
Put $1,000,000 into that and a year later it is worth $1.1 million.
Wait another year. $1.21 million.
Another year. $1.331 million.
In the USA if you take a percentage of those stocks and sell them then you pay 15% taxes on any profits you made. Not the value of the stocks, only 15% on the profits.
So if you sell $100,000 worth of stock that you originally paid $70,000 for 3.5 years earlier, you made $30,000 on the stock. How much taxes do you pay?
$4500.
Peanuts. You sold $100,000 worth of stock and only paid $3500 in capital gains taxes.
You can also... get this... sell $100,000 worth of your stocks that aren't performing quite so well. Let's pretend some of your stock portfolio wasn't doing so hot and you didn't actually make money off of those stocks.
So you sell $100,000 worth.
Guess how much taxes you pay on those stocks?
Well, if you didn't actually make any money off those specific stocks the amount of taxes you pay is zero.
Yup.
Zero. Nothing.
Your other stocks are going up in value, but you are just selling the stocks that aren't performing that well.
Or maybe they only went up in value say about 1.11%.
From $99,000 to $100,000. So you only made $1000 off of those specific stocks. How much do you pay in capital gains tax?
You only pay $150 in taxes for cashing in $100,000 of your poorest performing stocks.
And you wonder why the rich get richer and the poor stay poor? It is because the rich people don't really pay much in terms of taxes on their earnings, and the poor people don't own any stocks.
Seriously. Do YOU own stocks?
Do you?
Chances are fairly even that you do or don't.
Only 56% of Americans own stocks, although some of them own very little. The other 44% of Americans don't own a single stock. So roughly half of all Americans don't own any stocks.
Only 65.6% of Americans own a home (January 2021 stat).
It is no wonder so many Americans have problems with poverty. Roughly one third of Americans are unable to save money, invest in stocks, buy a home, etc. It is amazing that the poor haven't just risen up and started killing the rich. Buying a gun is so much cheaper in the USA.
The banks don't make it easy either. They charge people fees to buy stocks, which basically keeps the rich wealthy and the ability to buy stocks out of the hands of poor people. Some of the banks charge as much as $10 to make one stock trade. So if you only want to buy $100 worth of stock, but you are paying $10 per trade you've already lost money on purchasing the stock. It makes no sense.
But there are companies working to fix that.
RobinHood in the USA, and its counterpart
WealthSimple in Canada, are two apps which allow poor people to buy and trade stocks, but they don't charge such ridiculous fees because the trades are all done via computers. Instead the apps make money by offering premium services while just using the apps with the basic features is free.
What you really want to ask yourself is, aren't you tired of the banks taking your money, charging you bank fees, and then giving you almost zero in interest? Isn't it time your money started working for you, instead of just benefiting the bank?
Seriously. The banks just nickel and dime you with fees these days, buy pay almost nothing in interest because the interest rates are so low.
Meanwhile stocks like TXF are going up in value and paying 10.02% in dividends. See the stats below to see what I mean.
You don't even have to know much about stocks these days. You just have to know that if you buy ETFs that your money is being spread around between different companies and the people managing the ETF fund is doing all of the work for you. Just look at the yield below to see how much the ETF pays out per year in dividends and you will realize that certain stocks pay for themselves.
Seriously. There's a reason the rich white men keep getting richer. They're making all of the money off the stock market while the rest of the poor schmoes do all the work.
Isn't it time you got a piece of that??? Make your money work for you!
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