I’m writing this thinking about the so-called “third wave of philanthropy”, but it’s relevant to anyone who finds themselves richer than they expected.
Some people with big piles of money assume that what you do with a big pile of money is different than what you do with a normal amount of money. This is true for “differentiated goods”—houses, cars, food, and vacations can all get better if you spend more money on them.
There’s a big class of goods this is not true for: commodities. This is trivially true for most commodities—no rich person would think they ought to go searching for different iron ore than a normal person would buy. Of course, no one is going around buying iron ore for personal use anyway, so this doesn’t really matter.
However, a couple important things that people think are differentiated goods are actually commodities:
(Good) Investments: People wrongly think that the investment products you should use when you are very rich are different than when you are not. However, essentially everyone should be using broadly diversified index funds of stocks and bonds. Investment products are almost always priced as a flat percentage of invested money, so having more money won’t influence which you should choose. People also think that maybe they need to hire someone to trade for them because they might move the price of what they’re buying. However, if you’re buying a popular ETF you can probably trade tens of millions without moving the price.
(Good) Charitable Donations: If you’re giving in the area of global health and development, you can just give the money to GiveWell’s grant funds. If you’re giving millions at once, it may seem like you “need” to do more. You really don’t—millions of dollars is not going to change how GiveWell works (especially given that they already perform room for funding analysis).
Financial things that don’t change when you get a boatload of money
I’m writing this thinking about the so-called “third wave of philanthropy”, but it’s relevant to anyone who finds themselves richer than they expected.
Some people with big piles of money assume that what you do with a big pile of money is different than what you do with a normal amount of money. This is true for “differentiated goods”—houses, cars, food, and vacations can all get better if you spend more money on them.
There’s a big class of goods this is not true for: commodities. This is trivially true for most commodities—no rich person would think they ought to go searching for different iron ore than a normal person would buy. Of course, no one is going around buying iron ore for personal use anyway, so this doesn’t really matter.
However, a couple important things that people think are differentiated goods are actually commodities:
(Good) Investments: People wrongly think that the investment products you should use when you are very rich are different than when you are not. However, essentially everyone should be using broadly diversified index funds of stocks and bonds. Investment products are almost always priced as a flat percentage of invested money, so having more money won’t influence which you should choose. People also think that maybe they need to hire someone to trade for them because they might move the price of what they’re buying. However, if you’re buying a popular ETF you can probably trade tens of millions without moving the price.
(Good) Charitable Donations: If you’re giving in the area of global health and development, you can just give the money to GiveWell’s grant funds. If you’re giving millions at once, it may seem like you “need” to do more. You really don’t—millions of dollars is not going to change how GiveWell works (especially given that they already perform room for funding analysis).
AI Model Usage: Not used