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Comment by bionsystem | Hacker News Reader

A few things to note. 1 billion isn't a thousand times a million. If you make a conservative 5% let's say out of your net worth, you still need to work with a million, whereas you don't with a billion. So, technically, $400 with a million is some amount of work hours, whereas $400k with a billion is just pocket change taken out of more than most people lifetime's of earnings that is just 1 year of your interest.

Also, a lot more people (more than 1000x) have $400 to give than $400k so in a sense if people with $400 to give were all being very generous, they could amount to a lot more than what billionnaires could give.

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> 1 billion isn't a thousand times a million.

What?

Perhaps he was making a subtle point about liquidity.

Ah there is liquidity too, but your brother comment makes my point clearer.

About liquidity, yes most people with a million net worth actually have more than half in their house, so technically it is much harder for them to throw cash than somebody with a billion and a much smaller % of their worth in illiquid assets such as property or unlisted companies. I wish I had made this point too.

The point they were trying to make was that if you take appreciation of assets into account, if your billion is appreciating by a relatively modest 5% per year, you are passively earning 50 million/year. Whereas someone with one million passively earns 50 thousand/year. One is enough to live in luxury anywhere in the world for several lifetimes, the other is enough to live comfortably in some parts of the US (or like a king in many parts of the world) but not enough to throw 6 figures at a programming language foundation for fun.

Or to take an intermediate value, $10 million is 500k a year and most people will find it difficult to spend that much on themselves, so it’s going to grow on its own and compound. It will grow more rapidly if some is invested in the stock market.

Also, donating appreciated stock avoids taxes. This donation may have come out of a donor-advised fund.

Rich people can make substantial charitable donations rather easily and make a big difference. I suggest we encourage them.

Thanks, that is much clearer than my wording.

This is a common but silly claim; there is, generally speaking, no such thing as a safe rate of return that overcomes the inherent losses due to inflation. If you're getting a 5% rate of return on cash, that comes with both risk (someone with a billion dollars isn't going to benefit from FDIC insurance) and doesn't even overcome basic inflation.

That $50 million a year is also subject to income taxation and cannot be easily avoided. $50 million a year in interest on returns from cash will be hit at the 37% marginal rate, plus whatever the state assesses, so north of 50% in California.

I don't know man, maybe read the rest of the comment? Are you serious?

Have you ever considered purchasing a calculator?

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