Is anyone else getting annoyed with this......

gtvlusso

I saw this in the news recently:

http://news.bbc.co.uk/2/hi/8642021.stm

And did some Maths based on my own financial status. lets add some base facts:

1, I am a home owner and have a mortgage (low enough to be paid from one salary, by choice)

2, I have kids

3, I am married and my wife works part time as a lawyer

4, I am in a senior position in my company

5, I have about £300 of "unnecessary" outgoings (cleaners, dog walker, Sky TV and so on)

However, with the current Utilities mafia demand higher payments, petrol prices and the lack of payrises and bonuses for 2 years or more (I have omitted bonus payments as they are not part of salary as such). I will be financially worse off by near £7k per annum - at current food, utilities, fuel prices. Admittedly, I am in a great position compared to allot of other people, so I will not complain about my lot in life - although I do have some debt!

So, while people like me and other normal working families pay for the financial issues of this country, can I ask why and how the rich are simply getting richer?

Any ideas anyone or is this shrouded in secrecy?

bails87

Because the rich are the ones with the most power......

CyclingBantam

If you are doing the same job, getting the same pay with inflation and these cuts etc of course you will be worse off.

They are not rich because they are lucky or don't pay taxes. They are rich because they are doing things with their money/taking risks which you and I are not doing/can't afford to do.

You are an intelligent guy. You know this. Why are you asking?

clarkey cat

I am one of the super-rich so all of this is good news for me - in fact I've just ordered a new yacht: Imperius.

bails87

CyclingBantam wrote:

If you are doing the same job, getting the same pay with inflation and these cuts etc of course you will be worse off.

They are not rich because they are lucky or don't pay taxes. They are rich because they are doing things with their money/taking risks which you and I are not doing/can't afford to do.

You are an intelligent guy. You know this. Why are you asking?

I think the point is that low, medium and most high earners have seen a fall, either nominally or in real terms, in their income/wealth.

Whereas the super-rich have avoided this. They haven't just avoided the cuts, or lost some money but remained super stinking rich, they've actually got a lot wealthier. They're the kinds of people who are telling their staff on minimum wage that they can't have a pay rise to keep up with inflation, meanwhile they're adding to their billions. Rightly or wrongly, people will question that.

gtvlusso

bails87 wrote:

CyclingBantam wrote:

If you are doing the same job, getting the same pay with inflation and these cuts etc of course you will be worse off.

They are not rich because they are lucky or don't pay taxes. They are rich because they are doing things with their money/taking risks which you and I are not doing/can't afford to do.

You are an intelligent guy. You know this. Why are you asking?

I think the point is that low, medium and most high earners have seen a fall, either nominally or in real terms, in their income/wealth.

Whereas the super-rich have avoided this. They haven't just avoided the cuts, or lost some money but remained super stinking rich, they've actually got a lot wealthier. They're the kinds of people who are telling their staff on minimum wage that they can't have a pay rise to keep up with inflation, meanwhile they're adding to their billions. Rightly or wrongly, people will question that.

+1 Bails, this is exaclty what I am getting at.

I am not disgruntled about their wealth, happy for them, but I am wondering how they have gained, when everyone else is losing out!! Surely, the super rich have created the business environment that is currently failing/failed?!

notsoblue

Because the electorate keeps voting for parties that maintain this kind of situation?

jonny_trousers

notsoblue wrote:

Because the electorate keeps voting for parties that maintain this kind of situation?

What, like the Labour Party and the Concervatives? If only AV had gone through...

TommyEss

I read the title and thought this was going to be a thread moaning about the amount of electric bike reviews popping up on the site. :?

CiB

gtvlusso wrote:

Surely, the super rich have created the business environment that is currently failing/failed?!

That's like saying all cyclists jump red lights. Some super rich and not so rich people have created thriving successful business environments; equally a few have tried & failed. You can't lump the whole lot together and then call them all failures.

daviesee

gtvlusso wrote:

I am not disgruntled about their wealth, happy for them, but I am wondering how they have gained, when everyone else is losing out!! Surely, the super rich have created the business environment that is currently failing/failed?!

I covered this on another thread.

The rich with enough money to speculate buy up stocks & shares when the markets crash. When the markets recover they end up even richer. I have done this personally (on a small scale) and the investments I made 1 1/2 - 2 years ago are +30% roughly.
if you have cash you can do the same but you have to time it right, pick the right shares - and be prepared to take the loss if it goes pear-shaped. It is not the preserve of the super rich.

W1

gtvlusso wrote:

bails87 wrote:

CyclingBantam wrote:

If you are doing the same job, getting the same pay with inflation and these cuts etc of course you will be worse off.

They are not rich because they are lucky or don't pay taxes. They are rich because they are doing things with their money/taking risks which you and I are not doing/can't afford to do.

You are an intelligent guy. You know this. Why are you asking?

I think the point is that low, medium and most high earners have seen a fall, either nominally or in real terms, in their income/wealth.

Whereas the super-rich have avoided this. They haven't just avoided the cuts, or lost some money but remained super stinking rich, they've actually got a lot wealthier. They're the kinds of people who are telling their staff on minimum wage that they can't have a pay rise to keep up with inflation, meanwhile they're adding to their billions. Rightly or wrongly, people will question that.

+1 Bails, this is exaclty what I am getting at.

I am not disgruntled about their wealth, happy for them, but I am wondering how they have gained, when everyone else is losing out!! Surely, the super rich have created the business environment that is currently failing/failed?!

The wealthy have the cash to take advantage of depressed markets, such as faltering businesses, property etc. If you'd pumped all you had into the FTSE at 3800 you'd have done pretty well too.

TheStone

Inflation will usually suit the super rich as they have a very small amount of their wealth tied up in cash and do not have to rely on a below inflation pay rise.

The truth is that people's standard of living has risen dramatically over the last decade or so on the back of cheap imports (goods and labour) and a massive amount of debt (personal and government). This had the reverse and is doing so now. It will only get worse.

The government and central bank had a choice of doing nothing (deflation) or printing money and massively negative real interest rates (inflation). They chose the later, which very much suits the rich and the banks ...... and the government.

rhext

Life's a lottery, some win and some lose. I can't think of any society yet which has managed to find a way of preventing this sort of thing.

I console myself with the thought that they can neither spend it all nor take it with them.

shm_uk

What I am deeply suspicious about is when, for example, the Bank of England's latest Inflation Report "pencils in" an assumption that gas prices may rise by 15% and electricity prices by 10% this winter...

So when we get to the winter, all the energy companies go 'well, it'd be rude not to increase prices, now that everyone's expecting it'

rick_chasey

I'm increasingly of the opinion that just because you make a lot of money doesn't mean you actually add any real value to the world.

Daviesee - speculation and investment is a rich man's game, since a rich man can afford to lose a large proportion of his cash because the small proportion left is still very large in absolute terms.

nation

I thought that report was talking about the value of assets, not liquid cash.

So, if they had a stake in a company that suffered in the recession, that company bouncing back means their theoretical "wealth" increased.

They're "richer" in the same way that a person becomes richer if the value of their home goes up.

davmaggs

Because the rich buy assets that earn income, whereas most people merely consume.

Also if you are a PAYE gimp then you can probably never earn big money as there are only so many hours in a day and if you don't turn up then the cheques stop. The rich start a business that they can let others run. Also PAYE gimps buy stuff out of taxed income.

It doesn't matter in your early years, but hold a share, some land or something for decades and you will find that amongst your peers you are well off. For example OP your £300 a month equals over £3,000 a year, which means you really have to earn £5,000. Chuck £5k a year into some kind of investment and you get to retire early.

Anonymous

nation wrote:

I thought that report was talking about the value of assets, not liquid cash.

So, if they had a stake in a company that suffered in the recession, that company bouncing back means their theoretical "wealth" increased.

They're "richer" in the same way that a person becomes richer if the value of their home goes up.

This is a good point, remember reading The Rich List in the Sunday times and there was a graph that pretty much showed wealth back to what it was before the recession.

edhornby

GTV, you're almost there - the clue is in the point where you feel the squeeze, namely utilities food and raw materials etc, these are the point that big money is being made (the CEO of starbucks was having a pop at the commodity traders on C4 news last night...)

if you are rich enough, you can employ a fund manager to grow your cash on your behalf - and you need to treat your own money as an asset that you grow - it may sound facile but you need to have more money coming in than going out. for some people this means being parsimonious with what you have or working more or both, but of course this is a conscious lifestyle choice too....

I am now going to point out that I'm not rich by any stretch so the above isn't a boast !!!

daviesee

Rick Chasey wrote:

IDaviesee - speculation and investment is a rich man's game, since a rich man can afford to lose a large proportion of his cash because the small proportion left is still very large in absolute terms.

I would disagree there (again? ). Their numbers may have more zeros on the end but the principle is still sound. Investing in the stock market when it slumps will give a better return than cash savings or ISAs assuming it bounces back (which it has). They just play with bigger numbers that's all.
As a theoretical example - Say I invested 10k in a shares ISa when the markets slumped. That could be worth 13k today. Now 3k profit may be peanuts to a millionaire but it is more than a handy profit to me. Add zeros to the figures and it is easy to see how the rich can get richer.
Oh, and knowing when to sell is as important too. You can be a paper millionaire one day and a pauper the next.

usedtobefast

This thread started with :-

I saw this in the news recently:

http://news.bbc.co.uk/2/hi/8642021.stm

This article is over a year old, why start a thread on this now ?

Stand on soap box ...

What we all need to do is encourage people to avoid spending their "assets" in outlets owned by people like Philip Green (BHS) who use tax loop holes to avoid paying into the UK plc tax coffers. Perfectly legal but very immoral. If revenues to these people fall to zero they soon start to realise that maybe they should do they're bit.

Step off soap box ...

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daviesee

usedtobefast wrote:

This thread started with :-

I saw this in the news recently:

http://news.bbc.co.uk/2/hi/8642021.stm

This article is over a year old, why start a thread on this now ?

Stand on soap box ...

What we all need to do is encourage people to avoid spending their "assets" in outlets owned by people like Philip Green (BHS) who use tax loop holes to avoid paying into the UK plc tax coffers. Perfectly legal but very immoral. If revenues to these people fall to zero they soon start to realise that maybe they should do they're bit.

Step off soap box ...

0

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Or they cut their losses and retire to tax free Bahamas. Their choice.........

gtvlusso

Admittedly, the link is bad, but I saw something about this on the news this week....

**searches for more relevent linky....

CyclingBantam

W1 wrote:

gtvlusso wrote:

bails87 wrote:

CyclingBantam wrote:

If you are doing the same job, getting the same pay with inflation and these cuts etc of course you will be worse off.

They are not rich because they are lucky or don't pay taxes. They are rich because they are doing things with their money/taking risks which you and I are not doing/can't afford to do.

You are an intelligent guy. You know this. Why are you asking?

I think the point is that low, medium and most high earners have seen a fall, either nominally or in real terms, in their income/wealth.

Whereas the super-rich have avoided this. They haven't just avoided the cuts, or lost some money but remained super stinking rich, they've actually got a lot wealthier. They're the kinds of people who are telling their staff on minimum wage that they can't have a pay rise to keep up with inflation, meanwhile they're adding to their billions. Rightly or wrongly, people will question that.

+1 Bails, this is exaclty what I am getting at.

I am not disgruntled about their wealth, happy for them, but I am wondering how they have gained, when everyone else is losing out!! Surely, the super rich have created the business environment that is currently failing/failed?!

The wealthy have the cash to take advantage of depressed markets, such as faltering businesses, property etc. If you'd pumped all you had into the FTSE at 3800 you'd have done pretty well too.

Exactly, it is the perfect time to make money when everything is going badly and they have the cash and balls to take advantage.

W1

usedtobefast wrote:

This thread started with :-

I saw this in the news recently:

http://news.bbc.co.uk/2/hi/8642021.stm

This article is over a year old, why start a thread on this now ?

Stand on soap box ...

What we all need to do is encourage people to avoid spending their "assets" in outlets owned by people like Philip Green (BHS) who use tax loop holes to avoid paying into the UK plc tax coffers. Perfectly legal but very immoral. If revenues to these people fall to zero they soon start to realise that maybe they should do they're bit.

Step off soap box ...

0

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0

What is immoral about not volunteering to pay more tax than you are legally obliged to? Do you volutarily pay extra VAT or something? Or is this, as usual, just something that "the rich" should do, and the rest of us can keep using tax efficient measures to try to ensure we only pay as little as possible?

edhornby

usedtobefast's point is that the richest sector can afford to hire accountants - so the proportion of asset/wealth to tax is much less than lower and middle income earners

the cause of this is the tax laws in the UK are needlessly complex and need reform

hmbadger

daviesee wrote:

Rick Chasey wrote:

IDaviesee - speculation and investment is a rich man's game, since a rich man can afford to lose a large proportion of his cash because the small proportion left is still very large in absolute terms.

I would disagree there (again? ). Their numbers may have more zeros on the end but the principle is still sound. Investing in the stock market when it slumps will give a better return than cash savings or ISAs assuming it bounces back (which it has). They just play with bigger numbers that's all.
As a theoretical example - Say I invested 10k in a shares ISa when the markets slumped. That could be worth 13k today. Now 3k profit may be peanuts to a millionaire but it is more than a handy profit to me. Add zeros to the figures and it is easy to see how the rich can get richer.
Oh, and knowing when to sell is as important too. You can be a paper millionaire one day and a pauper the next.

The last sentence is the key to why I think people on here who think that rich people make their money by buying low and selling high are talking rubbish.

The rich are no more able to call the top and bottom of the markets than anyone else. i.e. they can't.

daviesee

hmbadger wrote:

The rich are no more able to call the top and bottom of the markets than anyone else. i.e. they can't.

Calling the bottom is relatively easy - that is when people in financies are panicing.

Calling the top is quite easy too - it is usually when the papers have "We haven't had it so good" in the headlines.

Not foolproof but better than getting 0.5% interest when inflation is 5%.

PS - My (uninformed and worthless) prediction? That opertunity has been missed. The markets will wander up and down but be generally flat for the next year. At least. Once Countries fincancies (Greece, Portugal, Ireland etc) have settled down there will be growth again. The next crash will be due to oil. Either too expensive or supplies getting cut.

gtvlusso

Hmmm:

http://www.bbc.co.uk/news/business-13384857

More linky stuff - has anyone tried the online inflation calculator, mine does not look good.

hmbadger

daviesee wrote:

hmbadger wrote:

The rich are no more able to call the top and bottom of the markets than anyone else. i.e. they can't.

Calling the bottom is relatively easy - that is when people in financies are panicing.

Calling the top is quite easy too - it is usually when the papers have "We haven't had it so good" in the headlines.

Not foolproof but better than getting 0.5% interest when inflation is 5%.

PS - My (uninformed and worthless) prediction? That opertunity has been missed. The markets will wander up and down but be generally flat for the next year. At least. Once Countries fincancies (Greece, Portugal, Ireland etc) have settled down there will be growth again. The next crash will be due to oil. Either too expensive or supplies getting cut.

Prediction worthless? You said it! btw so are your theories on calling the bottom and top!