Anonymous wrote: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.

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.”

Teach your kids to make it on their own. And focus on you and your wife. That's it. Your children will thank you.

Anonymous wrote: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.

There's a category of people who have trust funds and family offices, and they either don't or can't spend down the principal, and they'll remain wealthy for the rest of their lives because there are safeguards in place. That's one category. Some people in this category still raise strivers. For example, they raise their kids to take over the family business someday. Other people in this category want their kids to be happy and not worry about making money, so maybe they become philosophy professors or work for a nonprofit - it doesn't matter what they do or earn; they are set for life.

It sounds like OP is in the category of having raised a smart, privileged kid who probably still has to earn a living to afford the lifestyle they grew up with. This is tough, but often works itself out because they are trying to keep up with their peer group.

Review the information at these links, for a start:

https://investor.vanguard.com/wealth-management/family-legacy-services/knowledge-center/preparing-wealth-transfer

https://investor.vanguard.com/wealth-management/family-legacy-services/knowledge-center

https://investor.vanguard.com/wealth-management/family-legacy-services/knowledge-center/wealth-goals

https://investor.vanguard.com/wealth-management/family-legacy-services/knowledge-center/active-role

It's also important that your children become educated about personal finance and investing, so they don't suddenly have disposable income while having no clue how to prudently make it grow instead of spending it as they receive it. Far too many people are fundamentally ignorant about such topics and consequently mismanage their assets or fall prey to high-cost, inefficient money managers in lieu of informed self-management or reliance on low-cost sensible fiduciaries like Vanguard.

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.

OP, focus on having happy healthy children who love and care for you. That’s truly more wealth than any monetary amount.

As long as your kid is happy and earns enough money to be self-sufficient while saving enough for retirement and whatnot, OP should back off. Who cares if he earns less than you? Some people are motivated by money and others are motivated by non-monetary things. As long as the kid is fed, clothed, housed, and has some savings (and is able to manage the money that he does have reasonably well), his parents should be more than happy.

The best thing you can do in a post-AI world is probably to encourage entrepreneurship. I predict there will be less room for corporate cogs in the future, but I'm just a random internet commentator.

My family is weird because my parents are wealthy but barely graduated from high school.

The next generation, which is me and my siblings, all got white-collar jobs thanks to fully funded educations, but because none of us is entrepreneurial, we're already financially behind where our parents were at our age.

My least academic kid is also the most entrepreneurial - he has been starting little businesses like window washing and snow removal since he was pretty young, and trading in his green light account. I think he will outperform his more academic siblings, but who knows? I hope they all do great and rise to the level of their grandparents.

I come from an aristocratic family with a recorded history going back to the 900s. My great-grandfather was a genealogist who sifted through records to put together the family tree and any attached history, and turned the whole thing into a book.

It's been interesting to read how only some of my ancestors built fortunes, at first fortunes of feudal conquest, and then political and business wealth, upon which the rest were able to live. Some relatives conserved money, others squandered it, but what's noticeable is what PP said: that it's rare for one individual to make a lot of money.

So don't worry overmuch about your kids do and don't be so prepared to lay guilt and shame at their feet for not living up to the efforts of their immigrant forefathers. They're not living in the same socio-economic conditions.

Let them get a job and start building wealth on their own separate from you. My kids know we are building wealth for generations and they are to add to the pile. Maybe I got lucky, but they are not spenders.
They know that money doesn't grow on trees.
We are usually thinking about our next investment instead of what to buy. Doing the research into the stocks to buy, keeps kids involved. Too bad we sold the roblox stock, but all stocks/crypto we have this year, did very well.

Anonymous wrote:Okay I come from a big, wealthy family four generations out from one guy who made a huge pile and here’s what I would say:

1) Parenting is relevant, but sibling variation is also huge. Like some branches have more issues than others with certain elements of mental health and such. But that doesn’t mean you can’t have huge variation in life outcomes within a nuclear family where parenting was the same and the average range is pretty big I would say.

2) almost nobody makes a lot of money. Talking a lot a lot. Plenty of people with solid professional careers and a few people who take risks for bigger rewards, but those are risks so that comes with failure.

3) the best way to preserve the original pile is to have fewer children. Barring someone who spends a ton of it or someone who makes a lot, both of which are unusual, the people who have fewer kids just ended up with a bigger piece of that original pile. I know this is obvious math but people forget about it and tend to think in terms of “squandering” when this is a bigger factor.

Hear, hear,
Rockefeller!

Okay I come from a big, wealthy family four generations out from one guy who made a huge pile and here’s what I would say:

1) Parenting is relevant, but sibling variation is also huge. Like some branches have more issues than others with certain elements of mental health and such. But that doesn’t mean you can’t have huge variation in life outcomes within a nuclear family where parenting was the same and the average range is pretty big I would say.

2) almost nobody makes a lot of money. Talking a lot a lot. Plenty of people with solid professional careers and a few people who take risks for bigger rewards, but those are risks so that comes with failure.

3) the best way to preserve the original pile is to have fewer children. Barring someone who spends a ton of it or someone who makes a lot, both of which are unusual, the people who have fewer kids just ended up with a bigger piece of that original pile. I know this is obvious math but people forget about it and tend to think in terms of “squandering” when this is a bigger factor.

Family rises for 3 generations and then declines. So your grandkids may decline. Or may not be resilient enough to adapt to changing world order. Don't worry.

Make them get a real degree, not english or sociology and don't pay for everything. For god's sake, take them off your insurance and cell phone plan when they graduate

My parents and in-laws were extremely hardworking, first gen immigrants (scientists and engineers) who achieved their American Dream - building enough wealth to fully fund their kids’ and grandkids’ private education, weddings, down payments, etc. with generous retirement pensions that will see their assets continue growing for life.

My spouse and I, as well as our respective siblings, didn’t work nearly as hard but all went to prestigious schools and embarked on typical “striver” careers in finance, consulting, law, and the like. I stepped off the hamster wheel to become a SAHP and only went back to work part-time once our kid was in middle school. We lack the security of lifetime pensions, but having had the advantage of being born on 3rd base, have accumulated more retirement savings and overall wealth at this point than our parents.

Our kid is heading to one of our undergraduate alma maters this fall, and if we were both born on 3rd base, they’re being waved straight to home. While we’ve raised them to recognize their privilege and tried to teach them good financial values, I’m not sure how much has actually gotten through given they haven’t really been tested. Any advice for preventing generational decline from those who have been there, done that?