Wealth inequality is not just from accumulated income. About a third of millionaires attain their wealth from investing. Wealth inequality, however, has been exacerbated by the limitations placed on the most rewarding, and most risky, investments: startups. Investing in small companies can have very large rewards. But, small companies can fail easily from short financial interruptions. Investing benefits from research, startups can be difficult to research because they have no historical data, which makes it easier for frauds to take advantage of misrepresenting small companies to investors. The risks were the reason investing in startups was restricted to ‘accredited investors’, people whose wealth was more than a million dollars or whose income was more than $200,000. The extra money provided a cushion in case of problems. The restriction, however, exacerbated wealth inequality because it meant the rich could get richer, but the poor couldn’t – at least not through that mechanism. Now, the poor can invest too. There are still restrictions, like a $2,000 cap for people worth less than $100,000, but at least this is one step towards equalizing wealth without having to redistribute it.
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