A report from Oxfam has been making the rounds on the internet which claims that Bill Gates will become the world’s first trillionaire in the next 25 years. Several media outlets across the globe covered the news. Social media lost their shit. World’s first trillionaire is a really big deal. OMG! OMG OMG!
However, very few of them actually stopped to wonder: Is it really true?
Here’s what Oxfam’s report cited:Â
On the face of it, seems totally legit, right?
WRONG!
Oxfam missed out on a crucial detail when calculating this 11% growth rate: Compounding. When you apply the formula to calculate the compounded annual growth rate (CAGR), you get a result of just under 4%.
To put it simply, going from $50 billion in 2006 to $75 billion in 2017 gives you a compounded growth rate of just 4% NOT 11% as Oxfam’s report states.
Once we use the CORRECT growth rate to calculate how much Bill Gates will be worth in 25 years, we get a figure of around $200 billion. That’s still not a small amount, but not quite close a trillion, is it?
So referring back to Oxfam’s claim that Bill Gates may become the world’s first trillionaire; I can confidently say, it is utterly misinformed.
I feel the guys at Oxfam need to get an economist or at least a first-year commerce student to go over their calculations before reporting such ludicrous claims.
So, my advice to you all is this: Don’t trust everything you read on the internet. (Calm down, the irony of that statement is not lost on me.)
Source: Forbes