Anonymous wrote: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

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

Interesting to be able to go back so far. My family has "fallen" from upper, upper middle class (maybe poorest rich) to lower, upper middle class in 125 years. So a status drop. However, in terms of life basics, I like to think about how we are much better off than medieval kings in terms of healthcare and longevity.

It's clear to me that choosing educated but lower-paying professions and marrying down for brains and love has diminished the family wealth. Also our family is very small. We moved through the demographic transition where educated women had only a few children long ago. And there were also a lot of female descendants and due to discrimination against women, that has meant a reduction in income potential.

I'm glad the world has modernized. I'm also fine with people prioritizing their intellectual interests over making piles of money. I'd say that although we are great savers, we are not good long-haul investors. Low risk-tolerance and low trust in others have prevented wealth from multiplying. I'm conscious of that and looking for ways to improve. But I'm not going to spend time weeping and waiting about a declining generational standard of living that has still given women more autonomy and safer lives. And I do expect the future to be an improvement regardless of an inflation-adjusted wealth stockpile.

You’re ancestors had huge legal advantages. The establishment of the federal personal income tax in 1913 made preservation general wealth more challenging. There are also other factors.

Anonymous wrote: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.

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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.”

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.

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.

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.

This is too simplistic, and is consequently incorrect.

In your example, you could sell shares and still see portfolio growth, if the value of the shares increases more than the value of the shares you sold. And, of course many stocks pay no dividends. To generate income from a portfolio of equities which generate no dividends, you necessarily have to sell shares. And that's fine. You'll progressively have fewer shares, but if the share price grows enough your holdings will still be worth more than when you started - the number of shares you have is irrelevant to the total value of your holdings.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.”

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.

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.

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.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.”

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.

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.

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.

Anonymous wrote:I understand that your children have the benefit of a good education, good extracurriculars, good healthcare and diet, etc. But I don't see why you HAVE to give them everything just because you're rich. They want gas money at college? Get a job. Did you buy them a new car? Buy them a used car instead. Need a laptop? Offer to pay for a base model and if they want a better laptop they pay the difference. One of the problems that I see a lot is that people just give their kids everything they want and they don't learn value.

Your kid is just going to college now, so I don't think it's too late for them to learn independence and responsibility.

Anonymous wrote:

Anonymous wrote: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.

Interesting to be able to go back so far. My family has "fallen" from upper, upper middle class (maybe poorest rich) to lower, upper middle class in 125 years. So a status drop. However, in terms of life basics, I like to think about how we are much better off than medieval kings in terms of healthcare and longevity.

It's clear to me that choosing educated but lower-paying professions and marrying down for brains and love has diminished the family wealth. Also our family is very small. We moved through the demographic transition where educated women had only a few children long ago. And there were also a lot of female descendants and due to discrimination against women, that has meant a reduction in income potential.

I'm glad the world has modernized. I'm also fine with people prioritizing their intellectual interests over making piles of money. I'd say that although we are great savers, we are not good long-haul investors. Low risk-tolerance and low trust in others have prevented wealth from multiplying. I'm conscious of that and looking for ways to improve. But I'm not going to spend time weeping and waiting about a declining generational standard of living that has still given women more autonomy and safer lives. And I do expect the future to be an improvement regardless of an inflation-adjusted wealth stockpile.