The importance of Teaching your children how to invest and thrive for the future.
Patience and time in building the family fortune.
Today we begin to explore the way people with generational wealth think, we call this “old money” how does old money think?
If we want To know how to build generational wealth, then we need to look at how people with generational family fortunes think.
How is their thinking different from our own?
What do they do differently from the rest of us?
What separates the truly wealthy from the rest of us?
Specifically one thing comes to mind over everything else;
The Long View!
What accounts for it? How come some families stay rich generation after generation, while others never have a penny or a nickel?
“Culture,” or “Education,” perhaps.
But what, specifically, about culture and education is it that makes such a big difference in outcomes?
The wealthy take the long view.
If you thought you’d live forever, would you do anything differently?
Wouldn’t your attitude toward your money change a little? Wouldn’t you slow down, realising that you’re not in such a hurry to make money? Or spend money?
And wouldn’t you reduce your spending, too, knowing that your money would have to last you a long, long time?
Generational wealth is “forever” and it’s the long view!
If you look carefully, almost all Old Money thinking can be traced to a single source:
A longer-term outlook. The truly wealthy are careful to spend their money on things that hold their values over time.
It’s why they do not trade in and out of investments. Instead, they find a few positions and stick with them – for decades. they don’t rush in or out of anything.
It’s also why they prepare their families, over the course of many, many years, so that they will be ready for the challenges of managing and enlarging the family wealth.
(Hence why we’re writing this mini series titled “Generational wealth”)
They make sure family members add to their collective wealth, rather than subtracting from it.
It’s why they spend time and money on lawyers and accountants, too, making sure that the structures are in place to pass along wealth and protect it.
It’s why they prefer deep-value assets over momentum investing. Over time, value rises to the top. Momentum slows.
It’s why they will wait a long time – many, many years – for the right investment at the right price.
It’s why they like investments with long-term payoffs, such as timber, mining, and real estate.
And it’s how they are able to benefit from compound growth, letting relatively modest gains grow over several generations.
It’s why they are almost fanatical about eliminating costs: taxes, investment charges, and unrewarding living expenses. They know that wear and tear, over time, will wreck their family fortunes.
It’s why they develop long-lasting partnerships with the professionals they need to make sure their interests are protected and their plans are carried out.
Time, Time, Time
It is all a matter of time. Old-Money families have money. But they expect to have it for a long time. So they work hard, investing in education and professional advice, to make sure they have the personal resources they need.
The long view comes into play in almost everything. And over the long haul, it’s time, time, time… the most immutable, inflexible, unforgiving resource under the sun, that separates the rich from the poor.
It would probably be so much more fun to spend your money now, wouldn’t it?
But the main point is worth keeping in mind: Building wealth is not about getting something. It is about giving up something.
It is for the person who wishes to make a sacrifice – even if it is a relatively agreeable sacrifice – so that others may benefit from it, perhaps others whom we may never meet, the future generations. “May the tree you plant today shade and shelter your great-grandchildren.”
Until next time,