The Taxable Investor's Manifesto

CHAPTER TWELVEReinforce Positive Family Culture through Financial Design

Families with multigenerational perspectives to managing wealth can use this book as a guide to grow their assets across generations, but they need to build the right culture alongside. As we've seen, the investment choices are stark. They can invest to minimize short-term volatility (what is generally considered “conservative investing”). With this strategy, an investor may gain comfort and a sense of security in the short run, but the math dictates that they will preside over a declining corpus in the long term.¹ Or they can invest most of their assets in equities, public or private, and have a decent chance to succeed if they remain resolute through the market's ups and downs and through the vicissitudes of life.

With either approach, most of the financial risk in families with great wealth is borne by younger or even unborn generations. Of course, in most multigenerationally wealthy families, we have the good fortune to be talking about relative, not existential, risk. An appropriate understanding of this risk by those younger generations can instill in them a healthy and measured sense of insecurity that encourages risk taking, financial independence, resourcefulness, and the self confidence that blossoms from earned success, in whatever field that success is realized. Who doesn't want that for their children? The greater their resilience in the face of uncertainty and the more productive they are, ...