Why does the gap between poor and rich keep growing and what has the money system got to do with it?
People say the first million is the hardest if you want to get rich. Let’s get to the bottom of this saying by taking a careful look at what an investor can do with a million Euros. He or she can ‘invest’ their money as most banks, investment fund managers and financial advisors suggest: interest payments are a tempting reward and the greater the wealth invested, the more they flow. The great investment funds such as pension funds receive better conditions than individual savers.
| Capital assets |
Yearly income (in Euro) from an interest rate of |
|
|
|
1% |
3% |
5% |
7% |
10% |
|
1000 Euro |
10 |
30 |
50 |
70 |
100 |
|
100.000 Euro |
1.000 |
3.000 |
5.000 |
7.000 |
10.000 |
|
1.000.000 Euro |
10.000 |
30.000 |
50.000 |
70.000 |
100.000 |
With an interest rate of 5%, a millionaire receives 50,000 Euros a year for lending her million. That is more than 4,000 Euros a month – with that one can even afford to live well in expensive cities such as Paris or Munich. If the interest is not consumed but reinvested in the asset fund, then the powerful dynamic of compound interest takes over. Instead of 50,000 Euros interest as in the first year, the millionaire receives 52,500 Euros in the second year and over 55,000 Euros in the third year. Not only does her wealth grow but also the extra income on the capital grows too.
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