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I was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.

by jshen 3y ago

Clent 3y ago
I would imagine it has a lot to do with how wealthy the family was. It's easier for a single generation to waste 50 million than it will be for them to waste 50 billion. Family sizes are also much smaller so the split of the inheritance will result in larger starting wealth for each generation.
- brewdad 3y ago
  One could blow through $50 million in a month and probably not even draw much attention. Wasting $50 billion is going to take a lot of dedication and hard work to achieve, especially if any of those assets are generating income.
ff317 3y ago
I have no data, but I would hypothesize that the generational advantages do not disappear easily, even if a large chunk of the monetary value does. Even just looking at from a purely monetary angle: maybe generation two manages to "lose" 70% of a $50 million inheritance. They've still got $15 million to start over with. Even if they lost 95% of the inheritance, they're still on a better financial footing than most with $2.5 million of capital laying around to rebuild themselves from. That's not enough to live like a king and never work, but if you're even remotely smart in managing that amount from somewhere in early to middle adulthood, that's still enough to at least never have a mortgage or worry about college for yourself or your kids. It's enough to start a successful small business or three as well. But I think there's another angle on this. Even if the kids stupidly lose a lot of the cash, they're still riding on a ton of benefits from their enriched childhood: far better health thanks to a virtually limitless diet of high quality food and great medical care, the best schools and tutors, connection networks to all the other rich kids from their rich neighborhoods and schools, and learning (through osmosis if not explicitly) all about their parents and grandparents lessons of being in executive positions and how to invest wisely and preserve capital, what kinds of lawyers and insurances you should have, etc. Bottom line is they could literally set 100% of the inherited cash on fire and they'd still have a much higher chance of re-becoming wealthy than most.

I was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.

by jshen 3y ago

I was wondering the same thing. I've heard conflicting things and I'm not sure how to make sense of that.

I would imagine it has a lot to do with how wealthy the family was. It's easier for a single generation to waste 50 million than it will be for them to waste 50 billion. Family sizes are also much smaller so the split of the inheritance will result in larger starting wealth for each generation.

brewdad 3y ago
One could blow through $50 million in a month and probably not even draw much attention. Wasting $50 billion is going to take a lot of dedication and hard work to achieve, especially if any of those assets are generating income.

ff317 3y ago

I have no data, but I would hypothesize that the generational advantages do not disappear easily, even if a large chunk of the monetary value does. Even just looking at from a purely monetary angle: maybe generation two manages to "lose" 70% of a $50 million inheritance. They've still got $15 million to start over with. Even if they lost 95% of the inheritance, they're still on a better financial footing than most with $2.5 million of capital laying around to rebuild themselves from. That's not enough to live like a king and never work, but if you're even remotely smart in managing that amount from somewhere in early to middle adulthood, that's still enough to at least never have a mortgage or worry about college for yourself or your kids. It's enough to start a successful small business or three as well. But I think there's another angle on this. Even if the kids stupidly lose a lot of the cash, they're still riding on a ton of benefits from their enriched childhood: far better health thanks to a virtually limitless diet of high quality food and great medical care, the best schools and tutors, connection networks to all the other rich kids from their rich neighborhoods and schools, and learning (through osmosis if not explicitly) all about their parents and grandparents lessons of being in executive positions and how to invest wisely and preserve capital, what kinds of lawyers and insurances you should have, etc. Bottom line is they could literally set 100% of the inherited cash on fire and they'd still have a much higher chance of re-becoming wealthy than most.