Leave your grandkids F.U. money

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Rise and Shine. Some families are cracking the code on multi-generational wealth, and it's not just luck. Here’s how to ensure your grandkids have “f**k you money.”

In this edition:

• Build generational wealth like the Medici family

• How NOT to lose $300 billion dollars

• Protect your family's fortune for centuries

Read time: 4 minutes | 1,090 words

STORY 

💰 The Medici Wealth Secret

The Big Idea: Most family fortunes disappear within three generations, but some last for centuries. Here's why.

Why it Matters: Understanding why wealth often vanishes can help you build and protect a lasting financial legacy.

Wealth rarely survives beyond the third generation. Statistics show that 70% of wealthy families lose their fortune by the second generation, and 90% by the third.

This phenomenon, known as "shirtsleeves to shirtsleeves in three generations," is a common problem that has plagued wealthy families for centuries. The Medici family, however, managed to buck this trend spectacularly.

The Medicis built wealth that lasted for seven generations. Unlike many of their contemporaries, the Medici family created a financial dynasty that endured for over 300 years.

Their success wasn't just about making money—it was about creating a system that generated and protected wealth across generations. This approach differed vastly from the short-term thinking that often leads to the dissipation of family fortunes.

The Medici method combined diversification, innovation, and legacy planning. The Medicis developed a comprehensive strategy for building and maintaining wealth.

They realized that true financial security came not just from accumulating money, but from a combination of diversified investments, continuous innovation, strategic alliances, and careful succession planning. This holistic approach addressed the common pitfalls that lead to the loss of generational wealth.

The Medici approach created a self-reinforcing cycle of wealth and influence. By diversifying their interests, innovating in finance, and wielding soft power through cultural patronage, the Medicis created a model for enduring success.

Their strategies not only built an empire that lasted for seven generations but also shaped the course of the Renaissance. This approach offers valuable lessons for modern families seeking to build and protect generational wealth.

Key takeaway: To build lasting wealth, focus on diversification, innovation, education, and instilling a sense of legacy in future generations.

Go Deeper: Read The Wolf of Investing to better understand financial history and how to be on the winning side.

FROM THE WOLF

“Family is everything…”

INSIGHT

🔑 The Generational Wealth Protector

The key to generational wealth isn't just accumulating a large fortune—it's about creating systems and mindsets that preserve and grow that wealth over time.

The Medici family's success demonstrates that with the right approach, wealth can endure for centuries.

We all know about those who have lost it all:

• Vanderbilt Family: 1877-1970s, $185 billion to near poverty Railroad and shipping empire crumbled due to lavish spending and poor management.

• Getty Family: 1957-2015, $15 billion to $5 billion Oil fortune diminished through family disputes, divorces, and kidnapping ransom.

• Pulitzer Family: 1900s-2005, $1.5 billion to minimal ownership Publishing dynasty lost control of their media empire over generations.

• Stroh Family: 1980s-2000s, $9 billion to $0 Beer empire collapsed due to increased competition and mismanagement.

• Hartford Family (A&P): 1950s-2015, $17.5 billion to bankruptcy Supermarket chain failed to adapt to changing retail landscape.

There are 5 key elements to building and protecting generational wealth:

1. Diversification: Spread investments across multiple asset classes and industries to reduce risk.

2. Financial Education: Ensure each generation understands how to manage and grow wealth.

3. Succession Planning: Develop clear plans for transitioning wealth and business leadership.

4. Family Governance: Create structures to manage family wealth and resolve conflicts.

5. Legacy Building: Instill a sense of purpose and responsibility in future generations.

Additional Insights:

• Most wealth is lost due to lack of financial education and poor communication between generations.

• Building a family "brand" or legacy can help unite generations around a common purpose.

• Philanthropy can be a powerful tool for teaching wealth management and preserving family values.

Go Deeper: How the Vanderbilts went from “Old Money” to “No Money”

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ACTION

🚀 Guarantee Your Grandkids “F**k You Money”

The goal is to pass on not just wealth, but the knowledge and values necessary to maintain and grow it responsibly.

1. Early Financial Education

• Ages 5-7: Use piggy banks and play store games.

• Ages 8-12: Open a savings account; teach budgeting with spend/save/give jars.

• Teens: Introduce investing; help them invest small amounts in index funds.

• Use apps like RoosterMoney to track allowances and teach money management.

2. Hands-On Money Experience

• Tie allowance to chores to teach work value.

• Ages 10-14: Help start a small business (e.g., lemonade stand).

• Teens: Encourage part-time jobs and internships.

• Match savings contributions to incentivize good habits.

• Involve them in family financial discussions.

3. Instill Values and Responsibility

• Create a family mission statement outlining values and financial goals.

• Engage in regular volunteering activities.

• Teach delayed gratification through long-term saving goals.

• Discuss family history and the responsibility of maintaining wealth.

4. Build Network and Expose to Opportunities

• Organize annual family business meetings.

• Arrange mentorship opportunities with successful family friends.

• Help teens attend business or entrepreneurship workshops.

• Expose them to various career options through workplace visits.

5. Implement Long-Term Strategies

• Set up a trust fund with guidelines for responsible use.

• Teach about asset classes and diversification.

• Involve older teens in managing a small portion of their trust fund.

• Introduce them to family financial advisors by age 18.

• Help create their own long-term financial plan by age 21.

Consistency is key. Regularly revisit and adjust these strategies as your grandchildren grow and as financial landscapes change.

SPEED REED

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