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Comment by SuoDuanDao | Hacker News Reader

If I give $10 to charity, my wealth is reduced by $10. The naive assumption is that if Bill Gates gives $10B to charity, his wealth is also reduced by $10B.

Can you explain why the naive assumption is wrong? Because I actually can't, not without more thought and research than I've given it.

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Because you can use $10B to give $500M/yr for a limitless period of time.

Gates can give substantially more money if he leverages it to grow over time. I would wager that it is going to take decades if ever that the Gates fund will hit $0. Yeah it's not as flashy as "Died with $0 of his fortune left", but under the hood the net good done is orders of magnitude greater.

> Because you can use $10B to give $500M/yr for a limitless period of time.

If you can do that in perpetuity, then it actually means you're giving away none of your wealth away. You're selling the time value of money back to the people that generated it for you.

You've essentially taken out a giant loan, but the interest is being borne by the people who generated that wealth for you in the first place. And your "charity" amounts to sometimes reimbursing those people for paying the interest.

In that case, more power to him, and no argument about net good - I guess for me, the issue is with the wording. 'Most of his wealth' to me implies someone's giving away most of the principle, not most of the proceeds. Which of course Bill Gates did, just to a charity he also controlled. Again, more power to him and I'm glad the precedent is set, regardless of how I feel about the Gates foundation's activities. But it still doesn't feel the same as giving it to a charity someone else controls.

You invest $100, now you have $110. You give away $10, you have $100 again.

Then your net worth is $110 and when you give away $10 your net worth goes down $10.

Gates pledged to give his wealth away before he dies, not immediately. And that's good - the world will be getting much more money than it'd get if Gates just gave away all his money the moment he announced it.

> Then your net worth is $110 and when you give away $10 your net worth goes down $10.

Gates' wealth fluctuates all the time. There was a time when he was rather low due to his donations - multiple 10s of billions down. He got back over $100B from cca $50B - that's $50B more for charity than if he just donated everything he had left.

I'm not saying it's bad to do what you're describing, I'm just saying when you actually donate money, not pledge, it decreases your net worth.

It does, but that doesn't mean your net worth will decrease by that amount that year. There are other effects - e.g. the rest of his investment portfolio.

if you give away $10 then your net worth at that moment goes down...it may easily recover that price, but if you count it like that then you can surely count that the money you donated would have been worth more too

Yeah but nobody has that granular logs of Gates' net worth and donations. At best, it's calendar months, sometimes you can try to assume weeks, with a big maybe.

cuz if i have 100b and give away 10b, but the remaining 90b grows 2x i have more than what i started with

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