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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Generational wealth here. I think key is not to touch the principal and have good investing strategy.  We definitely do not make enough to add to the pot (make high six figures through our professional careers) but key is not to actually spend any of the inherited wealth and only spend the interest, if at all. Get good lawyers, FAs and accountants.[/quote]

I’m also in the generational wealth camp and I’ve never understood this “don’t spend the principal” thing. What do you even count as principal? Why would interest or dividends be in a different category than other gains?

I agree to have good professionals but imo you need to think a lot harder than “don’t touch the principal.”[/quote]

Let me get this straight, you don’t understand why you don’t touch the principal? When you burn through the principal and you are broke you will quickly learn why. You are the example of why generational wealth only lasts a generation or two.[/quote]

I’m a pretty good steward, actually. But “don’t touch the principal” makes no sense. For one thing, how do you decide what is principal? I don’t understand why you would treat income differently from other gains. Or draw a line when what, when someone dies? When a business is sold? If we’re talking about deciding what to spend, well, that’s a different question and it’s based more on values and circumstance imo. For example one family branch/generation might draw nothing and add to the investment pot. Another might have a kid with special needs and take a lot. I’m all for responsible stewardship I just think “don’t touch the principal” is really not good enough as a plan. [/quote]

Your language makes it quite clear that you don't know what you're talking about. I don't think you know what principal is, or what these "other gains" are, that you so glibly cite. You should read a beginner's course on investment.

Principal usually means stocks in a stock portfolio. This means shares in companies like Apple, Microsoft, whatever it is. You have shares sitting in your brokerage/trading account. They are not in cash.

Income is the cash that comes into your bank account: salary as an employee, compensation for sitting on the board, or being CEO, or revenues from being a landlord, for example. Income can also be dividends. Dividends are cash sums that companies distribute quarterly to shareholders as a reward for their loyalty and support. Not every company does this, but some do.

The greater the number of shares, the greater the dividends, because companies give out a very small sum of money per share. You can spend the dividends like cash without reducing the number of your shares. BUT if you sell your shares, the company will give you fewer dividends, and therefore less cash.

If you own 40M shares and get 200K dividends a year, which might be enough to live on, but you start selling those shares, you will not have enough to live on.

Get it? You do not touch the Principal.

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