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Myths about rich getting richer and poor getting poorer

IndianMoney.com Research Team | Posted On Monday, September 30,2019, 02:31 PM

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Myths about rich getting richer and poor getting poorer

 

 

Myths about rich getting richer and poor getting poorer

We wish, the propagators of this notion weighed it on a comparative scale when the economy does well. What we need to understand here is that when nations formulate policies that enable economic growth, it’s equally good for the rich, the poor and the middle class. For example, the living conditions and spending habits of a middle class man living in Europe can be equated against a rich man in any of the developing nations. While it is a fact that the number of billionaires around the world has increased significantly, what’s not to be ignored is that the poverty rates across nations have gone down as well. Report says, over the past 30 years, more than a billion people have come out of extreme poverty.

Wealth gap between the rich and the poor

In India, the rich have gotten richer by approximately 300 percent in the last 40 years but the poor grew richer by a lower margin. As is said that the growth percentage of the low income category is slow, but what makes it so?

Many sociologists have made the claim that the poor are likely to stay poor because of the lack of income mobility. Here we expose the myth that people with low income survive within the confines of their economic class. If you do a comparative analysis of individuals who became millionaires in the last 10 years, you’d observe that most of them are self made. The improving socio-economic conditions are creating more opportunities which allow individuals, irrespective of their economic status, to set up thriving ventures. According to analysts, 3 out of 5 Indians will hit the top income bracket at some point in their lifetimes.

Another argument put forth by some of the thinkers is that no matter if everyone got richer, the income inequality is something to be worried about. Let’s take examples of countries like Venezuela and Zimbabwe. Incomes of people living in these countries are more or less equal but they live in poor economic conditions. On the other hand most Scandinavian countries also have income equality better than India, and their lifestyles too are relatively better. So, it’s certainly not income inequality that matters the most. It can be clearly understood that it’s not the income equality that stimulates better living conditions but the government policies and the overall socio-economic condition of the country.

See Also: Here's How SIP Can Make You Rich?

Understanding the National wealth to national income ratio

The last 20 years’ data reveals that there has been a steady increase in the value of national wealth when compared to national income. It’s not a condition specific to India but such a pattern can also be seen in countries like China, US, Russia, and Japan. The factors constituting national wealth are public and private wealth whereas for the calculation of national income, net domestic product and Net Foreign Factor Income (NFFI) are taken into consideration. In the past few decades, the wealth-income ratio has gone up but what is to be noted is that the incomes too have grown substantially. Which means, even though the wealthy are getting wealthier the low income categories too have drawn parallels.

Did all millionaires inherit wealth?

Irrespective of the nation we belong to, we all have examples of millionaires who inherited wealth. What we often take into consideration while comparing economic status is a relatively smaller group and in reality, these comparisons we draw turn out to be vague. If you check the Credit Suisse report, you’ll observe India has added close to 7500 new millionaires in the year, of which 18% are women. A close analysis of the economic conditions of these millionaires reveals that most of them were not inheritors but creators of their own wealth.

Does luck favor the wealth creation process?

Just take a look at some of the well known millionaires of today and try to observe how much luck has figured into their wealth creation process. Was it purely luck that enabled Vijay Shekhar Sharma of PayTm or Sameer Gehlaut of IndiaBulls to reach where they are today? There’s only one thing that’s common about them. Each of them had the capability to build over a concept and make it a phenomenal success over a period of time. Becoming millionaire is all about utilizing the resources available to you in the best possible manner that ‘luck’ is left with no choice but to favor you.

The whole idea behind discussing these points in this article is to help you avoid the negative ideas from taking charge of your mind. The first step towards becoming a millionaire is by letting go of thoughts that come in the way of your wealth creation process.

We’ll soon release the book ‘My Millionaire Friend’ authored by our CEO, Mr. C S Sudheer. It’s an interesting book that translates the complex ideas and concepts of wealth creation to layman’s terms. Stay tuned for updates on the release and be the first to secure a copy!

See Also: How Compounding Can Make You Rich?

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