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Money is not the root of evil when we are really, really rich.

Posted in Personal Finance

Remember that famous quote about money? “Money is the root of evil?” Frankly, I disagree. I think it’s more like “Human is capable of evil…” The richer we are, the more we could do, both bad and good. One day when we have RM77 billion, what would we do with it if we have three children? Divide equally among them?  How about giving each one of them JUST RM2 billion and donating the rest of it to charities? This is what the famous billionaire investor Warren Buffett plans to do. Here’s that report in Washington Post: Why the super-rich aren’t leaving much of their fortunes to their kids  (Surely it’s really going to happen) This was what Buffett told Fortune in 1986 (click to read that article) He wants to leave his kids “‘enough money so that they would feel they could do anything, but not so much that they could do nothing.” Well, the rest of his wealth will go toward philanthropic causes.

Buffett is a co-founder of the Giving Pledge along with friend and fellow billionaire Bill Gates. Buffett is committed to donating more that 99 percent of his wealth to charity during his lifetime or at the time of his death. Here’s another article in cnbc.com about what so many of the world’s billionaires will be doing with their wealth. In brief, it’s not going to all go to their kids. I think it’s time that more are done for the world’s poor. This is the latest set of numbers. The world’s poor are growing according to United Nation. Article in CBS: UN says number of hungry people worldwide is growing, with climate change partly to blame  There are 823 million people in the world facing chronic food deprivation in 2017. This is rising from 2016. South America and Africa showed the worst increase. The report called for policies to target groups most vulnerable to malnutrition, including infants, children, adolescent girls and women.

Education is the key to help poorer communities increase their income. Financial literacy is however the most important skill to have after that because the one with the most salary could still have far higher debts than those with lesser pay but better understanding of how to make their money a root for growing their money. When it comes to investing to ensure people do not fall into poverty, it’s important to note that property is an important part. Let’s look at a very brief example. A poor family whose father managed to buy a RM200,000 property and paid slowly over the next 30 years will actually own a RM500,000 house when he retires, even if the property price rises by just 2 percent per year. This RM500,000 is actually enough for his kids to further their studies in local private universities. This is the start of a better life for the next generation. Without that property, the father would still have to spend a substantial amount of money for rental and the kids will have to either get scholarships or continue to get low paying jobs. We do not need to even start talking about financial literacy. Money is certainly not the root of evil. However understanding how money works would go a long way for the poorer ones. By the way, only when the poor has extra money that they could buy more things. This is how the economy moves; when everyone has money to spend. Happy understanding.

written on 12 Sept 2018

Next suggested article:  Of low salary, lots of OTs and poverty and well, property

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