How Do We Grow Or Maintain Our Wealth?

The Chinese proverb about wealth not lasting more than three family generations has stood the test of time for one main reason:  it’s true. 

The idea of money being passed down from generation to generation is mostly a myth.  Sure, there are wealthy families that perpetuate their legacies, but according to wealth researcher, Thomas Stanley, most wealthy people are first generationally rich.

Scroll down the Forbes list of the world’s richest people and do a biographic search on them.  Very few of them represent a third or fourth generation of wealth.

How Can You Help Your Children?

Step 1

Teach your children the value of a dollar, and ensure that they become responsible consumers.  Here’s an example of how one mother is passing on financial lessons to her young children.

Step 2

Ensure that your children pay some of their college expenses.  Don’t give them a completely free ride.  For them to be successful, they’ll need to value money; if they have to pay for part of their schooling, they’ll stand a much better chance of being responsible with money.

Step 3

Encourage your children to start investing money as early as possible.  But make them earn the money they invest.

How Should Young People Think About Stock Market Movements?

Stock market assets represent pieces of real businesses.  If stock markets drop, young investors should celebrate because they’ll have opportunities to buy companies (or total market indexes) at cheap prices.  It doesn’t matter what your investments are worth next month, next year, or five years from now.  If you won’t be retiring for many years, you should prefer to see sinking stock markets.  Warren Buffett agrees.  

 Here’s an example of how I used fear and volatility to my advantage.

How Can you Ensure the Highest Probabilities of Success as a Stock Market Investor?

  1. Diversify your investments
  2. Ensure that you’re paying extremely low costs
  3. Don’t allow stock market swings to sabotage a solid plan.  Keep on track.

Sample Suggestions for people in Singapore:

If you can financially educate yourself and your children, you stand a far greater chance of building wealth (or maintaining it).

Then you can focus on using your wealth to make the world a better place, by selectively giving it away to empower others. 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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8 Responses

  1. Stanton says:

    I just finished reading "The New Coffeehouse Investor," and I'm starting to see all the connections that make indexed investing (and saving along the way) such an appealing financial plan. Thanks for the post and the recommendation!

  2. Chris The Truck Driv says:

    Hi Andrew, Been a while since I checked in with everybody! You make some great points about teaching our Children about building wealth early. I wish my Parents had sat down with me and had a serious discussion about Money when I was young! All they would tell me is " You can't rub two dimes together" which 2 a young kid is just very negative. I really didn't understand why they took that approach with me…and consequently I didn't start Investing until my late 30's….but I will be OK If I continue to follow my disciplined approach of buying Low Cost Index funds(VTI mostly and Vtthx) and staying DEBT FREE…I'm going to start Sharing with some of my Friends who are in their late 30's and early 40's to get STARTED NOW…PAY DOWN their DEBT….and Stay on a Disciplined Monthly investment plan….They will be in good shape 30 years out if they stay the Course……GOODBYE ANDREW and BLESSINGS on EVERYBODY!

  3. Cherie says:

    Hi Andrew, I just came across your blog and I am very impressed with your knowledge and your ability to share it in a way that "regular" people like me can understand. I don't work in the financial world so I have had to overcome a BIG learning curve while trying to understand and learn about how to protect the money my husband and I have worked so hard to save. I plan on picking up your book (along with some of the others listed on your book suggestions page) to help me manage our money and future. I did notice that the book "The Vigilant Investor" was not on your suggested reading list. The book was written by Pat Huddleston (a former SEC Enforcement Branch Chief) and has just recently been published. This particular book is a great way for people to educate themselves on the best way to protect their money. Take a look at the book — I would imagine that those who follow your blog would be interested in your take on it. Thanks again for helping educate the "average" people of the world!

    • Hi Cherie,

      I can see that you're the senior legal assistant for the author of The Vigilant Investor.

      Your friend's book isn't on the recommended list on my blog because it's a brand new book that isn't yet available in bookstores.

      I trust that it's a very good book, and I wish you and the author the very best.

      Andrew

  4. Hey Chris,

    What's really great is that you're now in a position to help other people with your financial knowledge. Years from now, your friends will thank you.

    It's great to see you posting comments on my blog again.

    Take care,

    Andrew

  5. Noorman Mubarak says:

    Hi Andrew,

    I happen to stumble upon your really really comprehensive, yet simple analysis of growing wealth of a blog, while trying to figure out online on how to be a better forex trader( I am failing miserably by the way).

    I do have a POEMS account. I want to enquire if DBS Vickers is similar to POEMS and if DBS Vickers is cheaper. I also have 5000 Singapore Dollars to invest now. Is it enough for DBS Vickers?

    My first investment will be Spore Bond Index( A35) with 3000 Singapore Dollars. I will Buy the Singapore Stock Index (ES3) later this year or in early January 2012, after I accumulate a minimum of 3k of savings to invest.

    I am 32 years old, hence I will put 30% in Bonds, and in equal amounts in STI and VT. Is this a sound enough plan to start with?

    Thank you in advance!!

    Sincere Regards,

    Noorman Mubarak

  6. Hey Noorman,

    It sounds like you have a great plan in place.

    It's a good thing that you dumped the Forex effort. With currency trading, there's no net winner. For every winner, there has to be an equal and opposite loser, so it doesn't make sense as an investment strategy.

    But if you buy and hold indexes, and the values of the market increase over time with dividends, you and everyone holding those equities will make money over time. It makes so much more sense.

    And yes, I do think you have enough money to open an account with DBS Vickers. I am not familiar with a POEMS account though.

    Good luck, and let me know if you have any further specific questions. I'd be glad to help.

    Cheers,

    Andrew

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