Today we talk with Ben from New Zealand about inter generational wealth; how to pass on wealth to your children and make it last for generations. Ben shows us what he believes to be methods to pass on wealth effectively and the strategies he is using himself.
We also talk about:
- Family culture
- Managing a lottery win
- Family organization
- Actual ways to transfer different types of capital
- Long-term investments
- Specialization and diversification
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Inter generational wealth: now that I have gathered all that money, what do I do with it?
Ben has been financially independent since the age of 26. Instead of retiring, he is currently working and saving 90% of his income to keep on generating wealth. He also devotes much of his time to study the mechanisms of transferring wealth across generations. He uses the Scottish saying as an example: “the father builds, his son buys, his son sells, his son begs”. For this reason, Ben is making sure he transfers the right capital on to his children and then on to the next generations. Cultural factors play a key role in the process.
Strategies and types of capital for wealth management in a family
Ben identifies three strategies to reach financial independence and manage it in a family context, named “the great accumulator”, “the collective” and “the family business”: each one has its own strengths and is better for different situations. All three strategies focus on the management of the financial aspect of wealth, but there are four different types of wealth that can be transferred on: human, intellectual, social and financial. The first three are much more important than actually passing on the money, since the knowledge and network they will gain will teach them how to keep the wealth going.
To retire or not to retire once you have reached FI
Ben made a brief attempt at retirement once he reached financial independence, but soon discovered that it wasn’t for him. He finds it’s much more rewarding to continue to build upon his family’s wealth and improve the different types of capital, not only the financial one. This doesn’t necessarily mean continuing as a fully employed worker, but opens up a wide range of possibilities, from building a business and developing ideas, to dedicating some time to cultural and charity activities.