Thanks Ellie! Iâm not sure whether I agree with either of these claims.
On investments, many private investment opportunities open themselves to you once youâre able to write a $100k+ check, and many of these have higher risk-adjusted returns than index funds.
Also, having more money should make you less risk-averse, which Iâd argue should make you more open to using strategies like leverage to increase returns, even if youâre sticking to index funds.
On charity, I agree that the calculus doesnât change much if youâve solely been deferring to large regranters, and I agree that deferring to larger regranters makes sense when you donât have much cognitive bandwidth to evaluate charities yourself. But if youâve been making political donations ($7k cap), or your individual contributions make up a large % of an EA orgâs treasury, having much more money should change the way you approach these donations. You canât spend your money in politics as easily, and youâll have to navigate stewardship for your preferred orgs while minimizing their reliance on your contributions.
Overall Iâd argue that a 2M+ windfall should meaningfully change the way you approach both your investments and your charitable giving.
For investments, private investment opportunities are not better than public ones on a after-fees basis (in fact, theyâre much worse). Private investments do a lot of shady things to make their returns look better than they actually areâand in the US they can get away with it because theyâre much less regulated. A great source of information about the problems with private markets is this podcast.
Having more money shouldnât necessarily change your risk profile either. While you might be more able to task risk, you also have less need to take risk (people with smaller amounts of money may need to take risk to have a decent chance of meeting future consumption needs during retirement). Additionally, even if a windfall did change how much risk you wanted to take, it wouldnât change the tools you should use to achieve that level of risk.
I definitely agree that a windfall should change your approach to political giving. However, Iâm not sure why switching from being a small donor to an EA org to being a major donor would lead you to change how you give (assuming that the org has room for funding). For any grant makers, even small ones, their room for funding is essentially unlimited because they can always start directing the money to new causes if their existing causes donât have room.
Lots of EAs made lots of money from early investments in OpenAI and Anthropic. Lots of hedge funds have consistently higher risk-adjusted returns relative to major equity indices, including Walleye Capital (my employer), most famously RenTech, and many more. I know people whoâve built their wealth off of well-timed real estate investments. None of these opportunities are available to people without significant wealth.
On donations, based on your writing that donors âcan always start directing the money to new causes if their existing causes donât have roomâ, it seems like weâre in agreement? My claim is just that if youâve gone from funding 1% of your favorite orgâs budget to funding 30%+ with a lot of room to spare, that might be the time to research other orgs to diversify your contributions and avoid key-person risk.
Thanks Ellie! Iâm not sure whether I agree with either of these claims.
On investments, many private investment opportunities open themselves to you once youâre able to write a $100k+ check, and many of these have higher risk-adjusted returns than index funds.
Also, having more money should make you less risk-averse, which Iâd argue should make you more open to using strategies like leverage to increase returns, even if youâre sticking to index funds.
On charity, I agree that the calculus doesnât change much if youâve solely been deferring to large regranters, and I agree that deferring to larger regranters makes sense when you donât have much cognitive bandwidth to evaluate charities yourself. But if youâve been making political donations ($7k cap), or your individual contributions make up a large % of an EA orgâs treasury, having much more money should change the way you approach these donations. You canât spend your money in politics as easily, and youâll have to navigate stewardship for your preferred orgs while minimizing their reliance on your contributions.
Overall Iâd argue that a 2M+ windfall should meaningfully change the way you approach both your investments and your charitable giving.
Hi Ariel! These are interesting points.
For investments, private investment opportunities are not better than public ones on a after-fees basis (in fact, theyâre much worse). Private investments do a lot of shady things to make their returns look better than they actually areâand in the US they can get away with it because theyâre much less regulated. A great source of information about the problems with private markets is this podcast.
Having more money shouldnât necessarily change your risk profile either. While you might be more able to task risk, you also have less need to take risk (people with smaller amounts of money may need to take risk to have a decent chance of meeting future consumption needs during retirement). Additionally, even if a windfall did change how much risk you wanted to take, it wouldnât change the tools you should use to achieve that level of risk.
I definitely agree that a windfall should change your approach to political giving. However, Iâm not sure why switching from being a small donor to an EA org to being a major donor would lead you to change how you give (assuming that the org has room for funding). For any grant makers, even small ones, their room for funding is essentially unlimited because they can always start directing the money to new causes if their existing causes donât have room.
(I didnât downvote you btw.)
Lots of EAs made lots of money from early investments in OpenAI and Anthropic. Lots of hedge funds have consistently higher risk-adjusted returns relative to major equity indices, including Walleye Capital (my employer), most famously RenTech, and many more. I know people whoâve built their wealth off of well-timed real estate investments. None of these opportunities are available to people without significant wealth.
On donations, based on your writing that donors âcan always start directing the money to new causes if their existing causes donât have roomâ, it seems like weâre in agreement? My claim is just that if youâve gone from funding 1% of your favorite orgâs budget to funding 30%+ with a lot of room to spare, that might be the time to research other orgs to diversify your contributions and avoid key-person risk.