heard this KH show yesterday
Cornelius Vanderbilt, one of the most successful businessmen in American history, built steamship lines and railroads. He helped build the nations transportation system. Vanderbilt died in 1877 as the richest man in the United States leaving an estate of over $105 million. With his share of the inheritance, George Washington Vanderbilt, Cornelius’ fourth son, built the Biltmore Estate in Asheville, NC. The Vanderbilts had a family reunion in 1973 in which 120 of Cornelius Vanderbilt’s descendants attended. In the crowd, there was not a millionaire among them. The wealth had dissipated. It was transferred without responsibility or accountability. William K. Vanderbilt, grandson of Cornelius, said “It has left me with nothing to hope for, nothing definite to seek or strive for. Inherited wealth is a real handicap to happiness.” Present-day economist John Kenneth Galbraith said that several generations of Vanderbilts showed both the talent for acquiring money and the dispensing of it in unmatched volume, adding that they dispensed their wealth for frequent and unparalleled self-gratification and very often did it with downright stupidity. Confirmation as to the validity of Galbraith's views is that only forty-eight years after the death of Cornelius Vanderbilt, one of his direct descendants died penniless.
Mayer Amschel Rothschild who passed away in 1812 opened a bank in Frankfurt, Germany where he made profitable investments for the royal families of several European countries and founded a banking dynasty. He taught his five sons conservative money management by making investments that produced reasonable profits rather than aggressive returns. His methods made him a tremendous fortune. Nathan Rothschild, the third son became a financial agent of the English Government. He stated, “It requires a great deal of boldness and a great deal of caution to make a great fortune. And when you’ve got it, it requires 10 times as much wit to keep it.” The Rothschild’s established a system. They loaned their heirs money or entered into joint ventures with them. The loan had to be repaid back to the family bank (a conceptual bank) while the knowledge from the experiences had to be shared and passed down to other family members. The family met at least once a year to share information and family members could not participate in the sharing of the family bank if they did not. Subsequently, the Rothschild wealth compounded and grew as it passed from generation to generation. In 2005, Mayer Amschel Rothschild was ranked 7th on the Forbes Magazine list of the The Twenty Most Influential Businessmen Of All Time. Today experts indicate that the Rothschild dynasty is valued between $100 and $600 trillion dollars, although no one actually knows for sure.
With the family repository there were three basic rules. Number one—his heirs could borrow money individually or enter into joint ventures, but the loans had to be paid back. For example, if they needed help with a college education, they could qualify with a good GPA, borrow the money for tuition, then pay the loan back at a nominal interest rate. Say they graduated from college and wanted to go into business, they could present the business plan, borrow the start-up capital and then pay it back or they could enter into a joint-venture and share the profits.
What if they failed? They weren’t out of the loop, because the second rule was that the heirs had to share their knowledge and experiences with other family members horizontally, not just vertically. This wasn’t just a parents to kids to grandkids connection. They shared among aunts, uncles, nieces, nephews.
The third rule? The family gathered at least once a year to reaffirm their virtues and intentions, or they were cut out of the loop. This is what I call an Authentic Wealth philosophy, or an ethical will.
So you can see in this comparison the outcome of two different approaches. Would we rather have the same fate as the Vanderbilts, with our fortune dissipating until it completely disappears? Or would we rather be like the Rothschilds, with our family bank passing along the knowledge and means to teach generations how to thrive? Take the time now to make a plan for how you’ll pass along not only your money, but also your knowledge, and how you’ll encourage your family to continue sharing and thriving for generations to come.
starting @ the 1:40 mark of this video is telling
Chess vs Checkers
Cornelius Vanderbilt, one of the most successful businessmen in American history, built steamship lines and railroads. He helped build the nations transportation system. Vanderbilt died in 1877 as the richest man in the United States leaving an estate of over $105 million. With his share of the inheritance, George Washington Vanderbilt, Cornelius’ fourth son, built the Biltmore Estate in Asheville, NC. The Vanderbilts had a family reunion in 1973 in which 120 of Cornelius Vanderbilt’s descendants attended. In the crowd, there was not a millionaire among them. The wealth had dissipated. It was transferred without responsibility or accountability. William K. Vanderbilt, grandson of Cornelius, said “It has left me with nothing to hope for, nothing definite to seek or strive for. Inherited wealth is a real handicap to happiness.” Present-day economist John Kenneth Galbraith said that several generations of Vanderbilts showed both the talent for acquiring money and the dispensing of it in unmatched volume, adding that they dispensed their wealth for frequent and unparalleled self-gratification and very often did it with downright stupidity. Confirmation as to the validity of Galbraith's views is that only forty-eight years after the death of Cornelius Vanderbilt, one of his direct descendants died penniless.
Mayer Amschel Rothschild who passed away in 1812 opened a bank in Frankfurt, Germany where he made profitable investments for the royal families of several European countries and founded a banking dynasty. He taught his five sons conservative money management by making investments that produced reasonable profits rather than aggressive returns. His methods made him a tremendous fortune. Nathan Rothschild, the third son became a financial agent of the English Government. He stated, “It requires a great deal of boldness and a great deal of caution to make a great fortune. And when you’ve got it, it requires 10 times as much wit to keep it.” The Rothschild’s established a system. They loaned their heirs money or entered into joint ventures with them. The loan had to be repaid back to the family bank (a conceptual bank) while the knowledge from the experiences had to be shared and passed down to other family members. The family met at least once a year to share information and family members could not participate in the sharing of the family bank if they did not. Subsequently, the Rothschild wealth compounded and grew as it passed from generation to generation. In 2005, Mayer Amschel Rothschild was ranked 7th on the Forbes Magazine list of the The Twenty Most Influential Businessmen Of All Time. Today experts indicate that the Rothschild dynasty is valued between $100 and $600 trillion dollars, although no one actually knows for sure.
With the family repository there were three basic rules. Number one—his heirs could borrow money individually or enter into joint ventures, but the loans had to be paid back. For example, if they needed help with a college education, they could qualify with a good GPA, borrow the money for tuition, then pay the loan back at a nominal interest rate. Say they graduated from college and wanted to go into business, they could present the business plan, borrow the start-up capital and then pay it back or they could enter into a joint-venture and share the profits.
What if they failed? They weren’t out of the loop, because the second rule was that the heirs had to share their knowledge and experiences with other family members horizontally, not just vertically. This wasn’t just a parents to kids to grandkids connection. They shared among aunts, uncles, nieces, nephews.
The third rule? The family gathered at least once a year to reaffirm their virtues and intentions, or they were cut out of the loop. This is what I call an Authentic Wealth philosophy, or an ethical will.
So you can see in this comparison the outcome of two different approaches. Would we rather have the same fate as the Vanderbilts, with our fortune dissipating until it completely disappears? Or would we rather be like the Rothschilds, with our family bank passing along the knowledge and means to teach generations how to thrive? Take the time now to make a plan for how you’ll pass along not only your money, but also your knowledge, and how you’ll encourage your family to continue sharing and thriving for generations to come.
starting @ the 1:40 mark of this video is telling
