I expect to have lot of money at the end since I enjoy saving for retirement and I’m well on the way to achieving my goals. My wife and I have discussed what will happen to the wealth when we’re gone. We’re not going to have children at any point so all that money will be wasted. I’ve thought of donating it to an NGO for animals and the same goes for the house. It’s a worthy cause and might actually help some souls.
But yesterday morning I had the most ripping idea in the few minutes before waking. I was so excited, I remained awake with eyes closed fleshing out the details. I can do it. I can actually freaking do it! So here’s my plan.
Humans can’t stay on Earth forever. Sooner or later, in one way or the other we’re going to have to get off this planet and seek our home elsewhere. Based on what I’ve read till now, life seems to be quite a rare commodity and intelligent life even more so. But I foresee collaboration problems. Even if everyone realizes it needs to be done, who will take the first step and who will supply the money?
Look at our predicament on climate change. We all know something needs to be done. Virtually every scientist and scientific organization in the world agrees that anthropogenic climate change is a reality. But when it actually came down to it in Copenhagen, what happened? That’s right. Nothing. Because though we all agree on what needs to be done, no one wants to pony up the money.
The same thing will likely happen when we humans need to leave the planet. A point may come when a huge debate is going on about it. Some will say there’s no danger and that we just have to stay put. Maybe they’ll question the science like they’re doing now with climate change. And even if everyone agrees, there’s going to be a huge fight about who contributes how much money if at all. The blame game will start and historical wrongs will be brought up…all in an excuse to prove that everyone except that particular group needs to contribute.
And here’s where I step in. When I die, I’m going to set up an entity like a trust fund or an NGO which will have the mandate to invest all my assets into stocks. It will accumulate there for a loooong time. Here are two scenarios using the standard compound interest formula: FV = PV (1+i)n
I use an interest rate of just 7% annually which is very low when it comes to long term returns on stocks no matter which country it’s in. To be conservative, let’s say I have just Rs. 4 Cr when I retire, or around $1 million dollars. This is how it works:
500 years later:
Future Value = 1 million * (1.07)500 = 491 thousand trillion dollars
1000 years later:
Future Value = 1 million * (1.07)1000 = 231 thousand trillion trillion dollars
Inflation will doubtless eat into the pile, but I’ve still been conservative. In the developed west, the stock indexes give 12% annual rates and they have 3-4% inflation. So my 7% is a conservative estimate of the difference between the two. In India, growth rates are much higher, but so is inflation. My 7% is even more conservative there.
Imagine if during Copenhagen’s climate convention, when countries were negotiating over mere millions, some NGO steps up and contributes $1 trillion with no strings attached! It’ll be sure to jump start and galvanize the proceedings. We would have walked out of Copenhagen with a treaty that could change our world for the better.
I’ll have to hire a reputed and solid legal firm to manage and oversee the assets as it grows – a firm that’ll continue to exist for the time scales at which we’re talking. What do you think? Can my idea actually work?
[poll id=”25″]
Hmm.. Sure that amount looks really big.
But…. don’t you think that – by that time the said amount in your FV calculations are achieved, it will be having less punching power than what the amount has today?
You can do more with 4 Crores today (or the day you are retiring) than you are ever able to do tomorrow (or after 100 years from your retirement).
But it sure is good plan for all good minded “evolutionary failures” to save all our future genes from doom :P Altruistic indeed
In reply to Sujith Abraham
Inflation will certainly take its toll. But we can calculate the PV for that as well. Which is why I took only 7%. Actually the rate would be between 12% (for developed countries index funds) and 20% (developing countries). But in the latter, the inflation is higher too. So 7% is the real interest rate calculated.
I voted “It won’t work – for whatever reasons… ” YES! Although, it’s worth a try. After all, no harm’s involved. :)
In reply to Darshan Chande
Any ideas as to why you have misgivings? I need more opinions so I can plan properly!
In reply to bhagwad
LOL! Actually, the misgiving is for I do not trust humanity. What’s the guarantee that what you have planned and intended the money to be, will be so by the hands of other humans. Besides, who knows how the events will roll out in the future. You might say that that’s a negative mindset. But the things is that I am NOT interested in it. So, thinking positive about it is beyond the point. I wouldn’t make an effort to do any such thing. Would rather use the money for my wellness now. If the money is too much in excess then too I wouldn’t really bother so much as to what happens with it.
But then I said no there’s no harm in trying it if that beings you contentment. :)
In reply to Darshan Chande
There’s no guarantee at all. I don’t aim to be the savior of humanity :D The burden isn’t just on my shoulders, but on everyone. My purpose is to give a chance to those who come after me. Whether they take that chance or not is up to them. But it’s one less hurdle to overcome.
Do discount inflation and costs of managing your savings. Do discount the fact that in the future growth rates will slow down dramatically (as they are in the West already).
Do discount for the fact that unless you ensure freedom and good governance, the funds you save will be looted by someone.
Do discount for the fact that major calamities like asteroids could wipe out the earth well before it is time to move.
Do note that if the world does continue into the future, it will be wealthier by 1000s of times than what it is today.
Do note that in a million years the human species will not look anywhere close to what it does today – having evolved into something else (possibly multiple species).
All said and done, this sounds like an eminent waste of money, but will get people talking… Like those people who freeze their remains in ice hoping to wake up one day… Fun stuff. Will keep a job to some banker or financial guy.
You may be, in my view, much better off investing this into freedom and good governance.
But you are free to spend your money as you wish. It takes all kinds to make the world.
In reply to Sanjeev Sabhlok
Thanks for the points Sanjeev! I needed exactly this kind of feedback to further refine my plans.
In the west, inflation rates are low as well. So the 7% I took is the difference between inflation and expected returns. The US stock market gives 12% in the long run and the inflation is just 3-4%. I’ve actually been conservative in my estimates.
Your second point is valid. I’m thinking of setting up the fund with an Internationally neutral agency.
Third point is again valid. But what to do about that? :) I’m hoping we’ll have 100 years warning or so for major asteroids
World will be wealthier – much wealthier. But compounded interest is a powerful force and the figures above will have massive punching power even at that time. We can do the PV calculations and see…
I’ll be very happy indeed if my help is not needed in millions of years. I love my species and love life in the world. My final purpose is to ensure that it continues. If it does that on its own, my goal is reached!
In reply to bhagwad
Actually you’ve already calculated the inflation rates. The ‘i’ in your equation stands for inflation. The 7% is actually the rate of inflation. It’s also the interest rate because the interest rates are in line with inflation (they are essentially one and the same!).
Speaking from a purely financial calculations POV, you may have to come up with 2-3 different future values since the stock market won’t always return 12%. You may have to invest in US bonds for the kind of long-term investments you have in mind. The bonds return only as much as the rate of inflation i.e. the interest rates there don’t exceed the rate of inflation. As for the stock market, you may have to consider market effects and find an expected average return over 1000 years. They may not return 12% (they might return a lot more than 12% or a lot less than that!).
So you could have three different calculations – better than average returns (best case), average returns and less than average returns (worst case) and then you will get three different figures.
I think whichever way you look at it, unless the world comes to an end (or changes drastically from what we know today), you will have a significant amount of money in the bank! Will people 1000 years down the line use it for the purposes you intended that money to be used is open for debate. For all you know, you might just end up as another guy on the cross or a dude with a flute worshiped once every week/month/year :P
In reply to Ashish Deodhar
Now that would be ironic – an atheist who ended up being worshiped!
I’m thinking of setting up the fund with an international body – I don’t know how to go about that exactly, but I have time to figure it out. That way I can try and protect it from governments. The UN maybe?
1000 years is a long time Bhagwad. Think about where humans have reached in 1000 years and then imagine where we would get to 1000 years hence.
I am a very materialistic person and believe in living for the day so don’t be surprised if I said I would spend all that money on myself if I were you! Travel the world and beyond, do things you’ve never done before, invest in a business or technology… there’s so much to do instead of stacking that money in the bank!
Having said that, I’ve voted “it can work” because if I give it an unbiased thought, I know it could work purely in terms of maths. i.e. you will get closer to the desired figure, given all things equal! Will that money be able to save humanity? I am not so sure :)
In reply to Ashish Deodhar
My problem is that I don’t have any needs which require me to spend money. Hence the plans :)
1000 years is certainly a long time and won’t it be nice if my help weren’t needed? But human nature will remain the same and money will still have the same principles (both have been the same for the past 1000 years.) Let’s hope my stockpile can make a difference.
Hi there!
When we look at the present day world, it looks so chaotic to me. Sitting in comforts of our homes and keying in the letters, it looks so easy, but is the life so easy for all the humans on the planet? The answer is a simple no. Can it be easier in the near future, the answer is again very bleak. Everyone’s hanging by a glimmer of hope.
Whether we believe in the creator or not, life is going to end one day. If not all at least ours in the near future.
It doesn’t matter whether we are religious or atheist, but it does matter, what is inside of us, what we think about.
Take care!
Goodness, you put a lot of thought into this. :)
In reply to RenKiss
Yep – but so many details are yet to be worked out. Good thing I have lots of time :)
There are 2 reasons that come to mind immediately to justify it won’t work mentioned below,
1. The speculations and calculations on their basis are wrong. Simple question is to ask how did you select 7% rate of interest. It is obviously on the basis of statistical analysis available for US and Indian investment market. Is there a statistical analysis report that shows a Legal firm in existence, where you plan to invest your monies for 500 or 1000 years. It reminds of Lehman which could exist for 150 years before strangling itself. Think about it.
2. Secondly, it is about Control. You can control your savings and increase your assets till 4cr or 1 mil before retirement but wouldn’t have control over the funds being handled by the brains at the legal firm to whom you have handed your funds.
Cheers
dkwebz
In reply to dkwebz
Two very good points dkwebz. Here’s how I plan to deal with them:
1. The lack of statistical analysis doesn’t mean it won’t work. It means we’re not sure it will. There’s a chance things will work out as planned. I’m hoping that if the legal firm in question crashes, it will be acquired by another one which will take over its responsibilities. I believe that’s how it usually happens. I can also specify (after thinking about it) whether or not some portion of the assets should be converted into gold to act as a safeguard against fluctuations…but that will reduce my interest rates considerably.
2. I’m going to have to try and create a detailed “statement of purpose” which will also lay down rules for who manages the funds. I can create accountability mechanisms to have the fund’s details online where the public can see what’s going on. I’m hoping that after the assets become significant, the public the world over will take an interest in seeing its progress and this can prevent it from being misused…
Wouldn’t it be better to use your money to better the world in your life time? Wouldn’t watching somebody’s life improve in front of you be more satisfying?
In reply to Sraboney
That would be nice. But there are lots of NGOs etc that do this work. However, there’s no one who’s looking out for our long term future.
With real estate prices being what they are, very few NGOs have a fixed physical presence. Give them your house. Also, when banks are going under like this, it’s a huge assumption to think that either the stock market or a legal/accounting firm will last 500 years. What if the stock market disappears?
Or climate changes so much that none of this money can make a difference then….but they wish they had one rupee 499 years ago…….
:-D
In reply to Sangitha
That’s a pretty good idea. I can leave my house to an NGO and invest all my other liquid assets to further the cause of humanity’s exit from the planet. Of course, a crash is always a risk. I can alleviate some of that by diversifying my money into a lot of countries. So unless something catastrophic happens to humanity as a whole, the money will be more or less safe.
Good good…but ideas are taking on a more concrete shape!
Sigh! Why won’t you just adopt me??
In reply to Writerzblock
Might not be a bad idea…I may need someone to carry forward my work :D