I just finished reading this book, it’s not exactly light reading at 217 pages, plus a bonus section. But it was a captivating read.
The book was of course about John D Rockefeller and his plan to preserve his wealth across generations.
It is a little known observation that while many multi-millionaires leave their families multi-million dollar fortunes, Historians teach us that after estate taxes, income taxes, division of the fortune multiple times amongst the descendants and bad financial management cause most fortunes to be gone by the 3rd generation.
The book gives several examples of families like the Vanderbilt’s who left fortunes, 105 million dollars in the case of the Vanderbilt’s and by the time of the family reunion 3 generations later, not a single Vanderbilt was a millionaire.
The book then goes on to describe one very wealthy and wise man, John D Rockerfeller, who gathered financial and legal experts together, no doubt the best legal and financial minds money could buy or employ, to create a family wealth plan to preserve and even multiply the family fortune.
The plan was very straightforward. It focused on the things which shrank wealth and built a family bank which kept his fortune from being divided, taxed and squandered. But provided a mechanism to allow the family members to lead rich, productive and luxurious lives. All while growing the family fortune.
The book is very detailed about the outline if the plan, and unsurprisingly another rich family the Rothchild’s uses the same methodology in their family wealth preservation plan, and several banks use some of the tenants of the plan to build income and reduce risk.
The plan has several parts, but mainly keeping the fortune together, creating s family bank to finance life purchases through loans and payment of all the principle and interest back to the family bank, along with the Family bank providing business loans, for individual wealth generation with payment of the loans with interest back to the family bank. Plus the use of whole or permanent life insurance to earn guaranteed rates of tax free return and provide powerful wealth multipliers through accumulated cash value, utilizing the 8th wonder of the world compound interest and of course the death benefit.
Conclusion
The book provided a interesting history of wealthy families, it delved into the methods a few families used not just to preserve, but increase the family wealth and what tools and strategies they used to make being wealthy a family trait. It was a long book, but enjoyable. I learned several strategies which require further study and development.
The most important things I learned is that the vast majority of people look to people in their same financial class for advice or behavior to emulate. While there is a type of comfort derived from doing what everyone else in your financial class is doing, economics teaches us that in order to improve your financial status it is better to look at the people above you on the financial ladder and emulate their behaviors instead. It is only by being unique in this manner that you can elevate your economic position. It is uncomfortable emotionally to leave the pack or herd, but the herd mentality that protects us from predators doesn’t serve us well when our herd is struggling financially. When we look at the wealthy like the Rockefeller’s and Rothschilds we see that they did things that other rich people weren’t doing and as a result they have been able to achieve things the many other multi-millionaire families haven’t been able to; beat the 3rd generation curse and instead of shrink, grow the family fortune. We see that even at their financial class in order to achieve financial goals the others in their class were not able to achieve they had to think and act differently.
A familiar thought to many I am sure.
✍️ by Shortsegments.
I was able to get the book for free at this website by giving them my email address.