Building Inter-Generational Wealth

B: The Big Picture

In specific terms, that focus is to enable MORE Families, from MORE countries, to use the strategies of Inter-Generational wealth creation, through the stock market, to create MORE wealth, for MORE family members on a revolving basis. This means;

• a) changing more minds from ‘working for money’ to ‘putting our money to work for us’,
  
• b) becoming shareholders, and thus part owners, of dividend paying companies whose products and services we use, and,
  
• c) as dividend receivers, learning how to re-invest all, or some of it, to grow our share count, so that, over time, we grow our investment by relying on the wealth-building powers of compounding, and time, (as measured in decades) even if we did not add any more money from our pocket.

The Book speaks to this big picture of putting more wealth in the hands of more people in more places from the equator to the north and south poles. The route it promotes for creating this wealth is the stock market. It highlights the principles and strategies that underline wealth creation, pointing out that these are both free and impersonal, meaning that everyone, everywhere, has equal access, and entitlement, to use them to build their own personal and or family wealth. The strategy it advocates for putting more of that wealth in the hands of more people in more places is inter-generational wealth transfer.

C: What Happens in this inter-generational wealth-building model:

• d) Great grand parents, grand parents, and parents, buy shares for their great grands, grands, and own children in outstanding dividend paying companies
  
• e) They compound the investment by reinvesting the dividends while each child is growing up
  
• f) Use the accummulated funds for educational, business pursuits, or just to build wealth to improve their quality of life
  
• g) Build endowments for retirement income, and
  
• h) enjoin beneficiary children to repeat the wealth building process when they become parents and grant parents and keep ‘selling the concept down the line’ from one generation to the next.

D: Why We Know It Can Be Done

The Stock Market has long intrigued some of the best minds of every era. About 100 years ago (I924) Edgar Lawrence Smith, an investment manager and financial analyst, published “Common Stocks as Long Term Investments“.

Over the next seventy plus years, many economic and financial theorists, including England’s John Maynard Keynes (The General Theory of Employment, Interest and Money) and investment researchers such as the University of Chicago’s Roger Ibbotson and Rex Sinquefield (Stocks, Bonds, Bills and Inflation: Year-by-Year Historical Returns (1926-1974) have reviewed his work and agreed with his conclusions about using common stocks to build personal wealth. In 1994, at page 52 in his celebrated book “Stocks for the Long Run”, Prof Jeremy J Siegel₁ of the Wharton School of the University of Pennsylvania wrote; “The doctrine that common stocks provide the best way to accumulate long term wealth, first expounded by Edgar Lawrence Smith nearly 75 years ago, has been reconfirmed in all subsequent research”. Then, at page 76 he underscored this by saying “Winning with stocks require only patience, not foresight”.

These various experts, and others, have done the research for our benefit. We, ourselves, need not be experts too. The focus of my Book, and Newsletters, is to show some of the strategies through which we can benefit from their work

E: How We Can Do It

Building personal and family wealth was never easy, or else everyone would be wealthy. It wasn’t in the past and is not going to be now or in the future, but if we follow the template laid down by the researchers and experts, we can do it.

Following are some of the well recommended strategies.

1. Change your mind set about money! ‘Stop working’ your butt off for it. Instead, Learn how to put what you have to work for you. This will transform your life, and your world, for the better and make you sleep at nights

2. Get the help of a Registered Investment Advisor (RIA) to start you off with your 1 st share purchases. (Remember, the focus of my Book is to get you to a place of making your own investment decisions. While you will rest on your RIA initially, eventually, your investing outcomes should be your responsibility

3. Start by buying the shares of a well-established dividend paying company. This will make you one of its shareholders, and part owner, even if a small one at this time

4. Annually, when a dividend paying company makes profit, it shares some of it with those own its shares. The portion a shareholder gets is called a dividend.

5. Start with buying the shares of outstanding dividend paying companies. This will give you a stream of quarterly dividend payments. Call this your dividend income stream

6. To grow your share count, reinvest some, or all, of your dividends. This is called Dividend reinvesting. When you reinvest dividends like this to grow your share count, the process is called compounding. It is a powerful catalyst for growing stock market wealth. The other growth compounder is time (as measured in decades)

7. For the benefit of your dependents, do not let your income stream die with you. Have income generating investments that will continue to flow to designated beneficiaries, after your demise, according to your distribution wishes.

8. To build wealth in your family, give each child a stock market investment at birth, or as soon as possible thereafter, and practice dividend compounding, This way ,the investment will grow with the child

9. Make a Will. Employ Estate Planning strategies to distribute your dividend income stream, and other assets, according to your own wishes

10. In investing, stop putting your focus on the amount of money you have to PUT TO WORK right now in comparison to other investors. Focus, instead, on Percentage Change. If a billionaire invests $1B and it doubles to $2B, he gets a 100% increase on his investment. If you invest just $1,000 and it doubles to $2,000, you get a similar 100% on your investment. The market is very impersonal. It works the same way for anyone who engages it. Rich or Poor. Focus on the percentage change always.

11. As a wage earner, and consumer, you should be a dividend earner too. Many of the world’s best dividend paying companies are ‘permanent residents’ in our own house and, Everyday, Everywhere, Everyone who is using their product, and or service, just like us, is ‘getting paid’ to do so (dividend!). Let us own the shares of these ‘permanent residents’ and ‘get paid’ too (through our own dividend income stream. Stock market investing, and wealth creation, are not much more complex than this)

12. The two dominant drivers of wealth creation in the stock market are:

• a) Compounding (same thing they taught us (or tried!) in school) and
• b) Time (as measured in decades) such as the years in your own life.

Put these two wealth builders to WORK FOR YOU while you pursue your career and sleep well at nights

13. The Stock Market, one of man’s best innovations, provides a ready platform to;

• a) Put your money to work for us by
• b) Engaging the two drivers of wealth creation

14 The stock market works on a very impersonal basis; that is, without regard to whether you are billionaire or ‘pauper: black, white, yellow or blue of skin pigmentation, or whether from North America, Africa, India, China, Europe or Latin and the Caribbean. What is even more important is that the principles are the same and they work, and manifest themselves, the same way.

15. “An investment in knowledge pays the best interest” Benjamin Graham, regarded as ‘the father’ of what is called ‘value investing’ wrote this in his seminal 1949 book, “The Intelligent Investor” As a new wealth building your knowledge base, Start by reading the Finance and Investing pages in your local newspaper and by subscribing to investment magazines. Also, see Chapter 25 of my Book The Stock Market: Route To Inter-Generational Wealth. It speaks to various strategies for building your stock market investing knowledge ‘without breaking your bank’

F: Five Advantages of this Inter-Generational Wealth Building Model

1. It puts our money to work for us within a long term framework
2. Our investment gets the growth promotional benefits of the two most profound growth enhancers in the market i.e. compounding and time (as measured in decades)
3. Our investment is managed by people who are incentivized to get the best value outcome for us (because it means the same for them…it serves their interest too)
4. We are left free to pursue our ow career paths while our money does the work for us. This is a form of what is called passive investment (only the money working, not us)
5. Due to his passive investing mode and the long term investing time-line, we can ‘sleep well at nights’ i.e. not having to be constantly watching the ups and downs of the stock market index every night.

G: Awareness Is The Foundation

Reader Requirement

It is sometimes said that the secrets of wealth creation are ‘hidden in plain sight’. The billionaires have long found this hidden secret. We must now find it too. it resides in the concepts of compounding and time (as measured indicates) Compounding is the act of something growing, getting bigger, or intensifying itself without external help. Time (as measured in decades) has the ability to magnify the impact of compounding. The billionairess have been sending these two powerful wealth builders (to work) to make money for them while they play golf. The time is ‘now’ for the rest of us to cultivate the awareness of what these two wealth-building ‘workhorses’ can do for us too. It is also said that many people who achieve the impossible (g) did it because they didn’t know what the rest of us ‘knew’ i.e. that achieving (g) was ‘impossible’ so , they followed their dream and did it! Like the ‘starters who were the foundation for many of today’s wealthy One Percent families, they believed they ‘could fly’ and did it. They had a feeling, a belief, an awareness, that it was possible for them to do so even though no one else had done it before. The purpose of this website, the Newsletters, and my Book, is to encourage more of us, in more regions, of more countries, from the equator to the north and south poles, to become aware, know, and believe that we, too, ‘can fly’ and become the first cornerstone of wealth in our respective family while we , too, sleep well at nights.

H: But Where, And How, Do We Start?

To get started in building the first cornerstone of wealth in our family means we will have to remain strongly purpose driven and, as spelt out in Newsletter #1, do the following:

1. Call the stock exchange in your country and ask them to send you the contact for the association of brokers who sell stock market investments
2. Call up at least three different brokerages and speak with at least three different Registered Investment Advisors (RIAs)
3. invite the one of your choice to become your guide, and mentor as you start the journey of building some wealth for yourself and your dependents
4. I have already gone down this route and I invite you to keep me in the loop for whatever assistance I can be

I: It’s For Everyone

Building family wealth on an inter-generational basis is for everyone, anywhere, and everywhere, who wants to build wealth for themselves, either to support present living standard or, by using compounding and time (as measured in decades) to build a retirement nest egg so that, the money will be there when they get there ie retirement age. However, it is specially aimed at great grands (Boomers) grands (Gen X) and parents (Millenials) who, as their legacy, want to enrich the lives of their dependents on a revolving basis.

J: Help From The Industry

Nothing in life is easy anymore but, with a little effort on our part, and some corporate incentives, I believe that more people, in more places and countries, could find more financial resources, to improve the quality of their lives. The effort that is needed is for more of us to accept, and own, the responsibility for our own, and our family’s financial welfare, relying on the two free for the taking wealth building platforms of compounding and time (as measured in decades.) When more of us do this, it will become easier for others to see, and embrace, the open secrets of wealth creation hidden in plain sight in these twin concepts of wealth creation.

The incentive to us, from the corporate side, is for the registrars and administrators of stock market exchanges across the world, to give all investors an easier opportunity to reinvest some, or all of their dividends, to grow their share count painlessly, and thus, almost without effort, enrich themselves and their dependents into future generations.