The Problem with Generational Wealth

Generational Wealth.

A topic that's on the minds of many.

• The Schwab Modern Wealth Survey of 2024 found that nearly three in five Americans are currently investing, with younger generations starting to invest at an earlier age.
• Similarly, Deloitte's Future of Wealth Report found that younger generations are increasingly focused on building and preserving wealth for future generations.

The above cases prove that generational wealth is an ongoing topic of thought.

However, things currently look bleak as we stand.

The Problem

The Problem: Generational wealth isn't "generational" anymore.

Running the numbers:

• 70% of generational wealth disappears in the second generation.
• 90% of it in the third generation.
• We're currently experiencing the largest generational wealth transfer in history, with $84 Trillion transferring from Baby Boomers to Millennials.

If left unchecked, this could be calamitous.

Pitfalls include:

• Financial illiteracy - Investopedia.
• Economic instability if that wealth is lost - Wealth Factory.
• Societal disparities such as inaccessibility to education and homeownership - The Fed Reserve Bank of St. Louis.

And psychologically,

Those who inherit wealth may not fully appreciate the effort required to attain it, as they lack the personal initiative to back it up.

Plus,

We tend to value things more when a cost is involved;

Free items (freebies) lack the perceived value that comes with personal investment.

The Solution

The Solution: Passing down generational wealth isn't enough alone - Pass down generational values too.

Values are insurance - They create and preserve wealth, not the other way around.

For this reason, books such as:

• The Intelligent Investor
• The Richest Man in Babylon, and
• Think and Grow Rich

Are timeless sources.

Though ancient, they preach values that transcend today.

• The Intelligent Investor emphasizes patience, discipline, and rigorous analysis.
• The Richest Man in Babylon teaches financial discipline, learning, planning for the future, and investing wisely.
• Think and Grow Rich emphasizes the need for a burning desire, faith, persistence, and having a mastermind.

These books have remained relevant in the 21st Century, offering principles that guide people toward financial prosperity.

The values in question also depend on the individual who is the guinea pig in this wealth-creation process.

And by virtue,

Values should be positive ones - Faith, hard work, perseverance, etc.

Wealth cannot create values, but values can create wealth.

How I'm Doing It

Because I like chronologizing my journey,

I'm considering:

1. Pursuing a meaningful goal.
2. Think of how many generations I want to go. (At least three.)
3. Documenting my journey by noting my wins, progress, failures, and values.
4. Possibly writing a book. (Think: Richest Man in Babylon or The Almanack of Naval Ravikant.)
5. Emphasis, reinforcement, and practice of these values.

Examples of values preceding wealth

Bill Gates

Bill Gates, though a centi-billionaire worth $135 billion, is giving his kids (only) $10M in inheritance.

He emphasizes the values of hard work, philanthropy, and vision.

Shaq

Shaq, having amassed riches over his multi-faceted career, is known for his famous quote:

“We ain't rich. I'm rich.”

Insisting that his children must earn their own success, Shaq demands hard work, education, and self-reliance.

The Rockefeller & Rothschild Families

The Rockefeller & Rothschild families have survived centuries based on values.

The Rockefeller family, entering its seventh generation with 170 heirs, is built on its core family values of unity, philanthropy, and cultural endeavors.

The Rothschilds, on the other hand, believed in keeping business within the family. Their values: Harmony, integrity, and industry.

Dubai

Dubai's growth, for example, can be attributed to the values of its founding father, Sheikh Zayed.

↳ Vision: Present-day Dubai stems from Sheikh Zayed's vision…in 1971.

↳ Tolerance and Co-existence: The Sheikh believed in tolerance, co-existence, and peace, so much so that he created a ministry out of it - The Ministry of Tolerance and Coexistence. (The first in the world.)

↳ Wisdom and Fairness: Sheikh's values stemmed from his wisdom, fairness, and acute insight, all of which reign in Dubai's governance today.

...

To close off this part:

Values > Wealth

In return, the wealth validates the values.

Conclusion

1. Values are important for creating and consolidating generational wealth.
2. While we're on the brink of the greatest transfer of wealth in history, we're also on the verge of losing it if left unchecked.
3. By prioritizing values first, we have insurance to help us gather more wealth as the generations evolve.
4. By documenting your journey along the way, determining and reinforcing what works, you provide a solid baseline for values that can transcend generations.

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~T.K.K

Thank you for reading.

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