5 Lies You’ve Been Told About Generational Wealth
5 Lies You’ve Been Told About Generational Wealth
Posted in Dinar Recaps Archives on 7/20/2019
By Pavithra Mohan
From TNT -- Ify: This Article explains why RayRen continues to say NOT to gift large monies but to Educate your children, grandchildren... Article on Generational Wealth:
Here’s what you have wrong about people who inherit money.
5 Lies You’ve Been Told About Generational Wealth
The markers of generational wealth are manifold, from the promise of a good education to the security of homeownership. Wealth begets further wealth, but not always through inheritance of assets.
“Much of the transmission of wealth to the next generation goes through these earlier life processes, such as supporting children’s education, supporting their ability to purchase a home, or to get married,” researcher Fabian Pfeffer wrote in a recent study at the University of Michigan. “All of these—education, homeownership, marriage—in turn help you accumulate wealth.”
But the extent to which family money helps future generations retain and build on their wealth—or acquire financial literacy—is less marked than you might imagine. Here are some of the commonly held misconceptions about the beneficiaries of generational wealth.
1. Their Wealth Lasts Many Generations
We don’t have to look further than one Donald Trump to see how wealth can trickle down and set up future generations for success. But generational wealth is actually harder to maintain than America’s richest families might lead you to believe: About 70% of wealthy families lose their wealth by the second generation, and 90% do by the following generation.
One reason that happens is the next generation may not be equipped to manage the money they inherit. But it’s also that family wealth can be diluted as it is divided amongst children, especially if each has a different stance on how to invest or manage the family finances. (Think of the family jockeying on Succession.)
Some financial experts even recommend that—not unlike businesses—families come up with a “mission statement” to establish financial values and goals, in an effort to preserve wealth across future generations
2. Their Parents Talk To Them About Money
You might think parents with money share their financial know-how with their offspring. But that’s not necessarily the case. “Some parents don’t want their kids to feel like they have a huge landing pad or that they may not need to work,” says Emily Green, a financial adviser at Sallie Krawcheck‘s investment platform, Ellevest.
To continue reading, please go to the original article at
https://www.fastcompany.com/90372281/5-lies-youve-been-told-about-generational-wealth