Imagine if President Bush decided to give every American $1,000,000. Does that mean everyone becomes rich? No, it means the normal distribution is ADJUSTED to factor in. Those that had 100,000,000 still have 100,000,000. Those that had 0, have 1,000,000 but it really hasn’t improved any.

Do you really think most PF Blogs are making millionaires out of anyone? Perhaps the top 10%, just like I pointed out!

This is indeed how it works out if you get enough samples of something.

However, this is like a predestination argument. In essence, you’re saying, “Well, 90% of you will not be in the top 10%, so don’t even bother, or don’t expect to move very far.”

So do we all just throw in the towel, stop reading each other’s blogs, and accept our financial lot in life? Of course not! Weak people can become stronger, dumb people can become smarter, and poor people can become richer. Just because most people stay right where they are doesn’t mean that we all should stop trying to move up.

I see this often too. a few of my friends will ask for advice and then do nothing (or what they were planning on doing anyway) while others will ask for advice and follow it.(even if it involves something they don’t understand like opening an account with a bank they’ve never heard of and buying a foreign currency CD).

Guess which people are always complaining about not having money

In both cases, the 2 groups had average or below average financial aptitude. However, 1 group can be shown what to do and the other group can’t. Not only are they financially dumb, they can’t even follow directions! – they’re definitely below average.

It also goes to illustrate what people consider “rich” rich. A person making 30k/year feels poor to those making 3x that income at 90k but they’re rich when compared to the rest of the world. Everything is relative but no one escapes the Normal Distribution

Also I wouldn’t call the rest average, it’s probably more like a bell curve where you’d find that if you kicked the top 10% and bottom 10% out of the room, you’d still have 10% of the 80 who are good and 10% who are bad, and everyone else in the middle. It’s not like all 80 people would have the exact same abilities.

It’s also worth noting that some skills are learned and developed and others appear innate. I don’t know if there’s a way that the bottom 10% in smarts can transform himself into being in the top 10%. However, I’m 100% positive (Iron Clad guarantee here) that a person in the bottom 10% of “financial guru-ness” can turn themselves into being in the top 10%. I’ve seen it with quite a few financial bloggers.

It’s also worth noting that many people in the US count in the top 10% of rich when compared to the rest of world. So maybe a lot of people are already rich and don’t need to “get there.”

Ironically, I can’t think of a simple frame of reference (involving humans) where the Normal Distribution wouldn’t apply. Even if you picked 100 of the best athletes around the world, 10% would be the top and 10% would be at the bottom, the rest would be average.

The statistical implication here is that only a small percentage will ever control large portions of the wealth in society by virtue of the distribution curve…

The important considderation here is that being rich or poor is all relative. So, by definition, only a small percentage can be rich. By comparison, someone with a net worth of $500 would be rich in most Africal countries.

So, if every person had twice as much money, the same number of people would be poor.

If you evaluate your life and you are happy, you are rich no matter what the scale says.