70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third. A new survey by the Williams Group wealth consultancy surveyed ‘high net worth individuals’ with more than $3 million in investable assets to ask how they are preparing the next generation for handling money. See: Poor little rich kids: most kids from wealthy families squander their inheritance:
“Looking at the numbers, 78% feel the next generation is not financially responsible enough to handle inheritance… Most of them have no clue as to the value of money or how to handle it.”
Consuming principle to fund spending and betting principle on risky financial assets are time worn ways to lose a fortune. Following mainstream financial
advice sales is another.
And then there is the usual: blowing principle on depreciating consumer assets. Studies show it takes the average recipient of an inheritance 19 days until they buy a new car.
Wealth preservation has always depended on the personal discipline of keeping risk low, not losing principle, and spending less than one earns in income.
It’s not rocket science, but evidently, it’s very hard for most to do.