Why Do Family Fortunes Disappear? - How Money Works

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John D Rockefeller was the richest American to ever live, as well as being the founding member of the three-comma club as the worlds first billionaire.

At the height of his fortune a few years before his death he was worth an estimated 1 billion dollars which may not sound like much compared to today's tech bro’s, but this was back in a time where the USA’s annual GDP was only 39.1 billion dollars.

This meant that his fortune was 3% of America’s GDP. Adjusted for inflation to 2020 dollars this would give ol John D here a fortune of 450 billion dollars. Or more than Elon, Bill, and Jeff combined.

But where is this fortune today?

Of course John himself died almost a century ago but if there was any fortune that was going to indefinitely set up future generations surely it would be this one right?

The same goes for most of these historic moguls, the fortunes of everybody from carnage, to the medici have more or less faded into total obscurity, outside of maybe a few names plastered on random buildings… (buildings that they don’t even own mind you)…

Now you might think you already know the answer, oh these fortunes get split up amongst children and then children’s children and then children’s children’s children until it was spread so thin amongst latter generations that it became almost totally irrelevant.

But that’s not entirely true… What’s more is that the real reason for the fall of these financial empires can tell us a lot about how money works as it has been passed down through generations and history.

#Wealth #Finance #HowMoneyWorks

[Basta]

Chinese proverb “Wealth does not last beyond three generations”

The first generation grew up poor, as adults they strove, lived frugally and built wealth.
The second generation saw the wealth being built and understood how hard it was. They continued to build but enjoyed a higher lifestyle.
The third generation grew up rich, never understood how that wealth was built. They take it for granted, live lavishly until all the money is gone.

[azieltobias]

Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.., I pray that anyone who reads this will be successful in life!!

[stephans]

The Dutch Government in recent years bought several high value paintings from the Rothshield family for our national art gallary for a total of over 100 million dollars. Paintings that were first just hanging in a person's bedroom in his secondary home in Paris. I would say this shows that they are not exactly short for money!

[kuchioasonga]

I think there is a lot of hidden wealth. The people listed as the wealthiest in the world are those that choose to be visible.

[Flowmaster]

the money didnt disappear, they just stopped telling people how much they really have

[thefrenchbastard]

they are still rich like sure they are far from the prominence there ancestors had but you dont need to be on the list of top 10 biggest fortunes in the world to be considered rich

[albionicamerican]

Funny, in the UK today the people descended from the old Anglo-Norman families are still wealthier on average than the Brits descended from the commoners the Anglo-Normans ruled over.

[michaelheckmann]

"3. Hard to follow" basically means those family fortunes did not disappear, but are hidden so well in the foundation of our economy that they now ARE the economy. And remember, Forbes list is just an "as far as we know" kinda thing.

[gotenks]

My family is by no means wealthy, but I've spent the last 11yrs of my life watching my parents piss away the amazing inheritance my grandpa left for us. Its infuriating and heartbreaking seeing people with no value for money be put in charge of it....let alone the existential horror of knowing I'll never have very much in my life. Best you can do really is come to terms with situation and live as reasonably as you can so you dont suffer.

[a]

Met a girl in Denver, Co, USA. Her name was Rothschild. For her 19th birthday her father gave her a sky scraper. I know this because we remodeled the top floor pent house for her. Crazy how much money people have. And you never really hear of these people

[corngreaterthanwheat]

This is a lot longer than the video I would make. It would just say "cocaine."

[petraarkian]

My mom works for the financial wing of a company thats entire job is managing wealthy heirs. None of them have direct control its like a company, they all vote on what the trust should do and for the most part the trust just provides them each with what they need to live a comfortable life without making a scene. Trust fund baby is a term for a reason. Depending on the size of the trust it can cover just specific expenses like health or education or be more broad and cover housing, living expenses, major purchases (cars, boats) etc. For the descendents it like having the worlds best scholarship just for being a _insert last name here_.

[eeverilogtutorial]

What I got from this video:
1. Money makes more money over time
2. In order for your money not to be affected by inflation, you have to turn it into an asset

[youtubevanced]

Imagine giving motivational speeches to people when your born into being a billionaire.
"you can do it, you can be born a billionaire if you just believe. Everyone can do it."

[MilnaAlen]

Also money isn't always easily accessible or obvious. Like my friend in high school, her dad's side owned a old manor with plenty of land but it would be very diffucult to sell. In practice her dad was a middle class programmer. Her mom was a poor cleaner, so my friend had to work to pay her own school books and bus tickets. It must have been weird to be basically both rich and poor.

[Natalieneptune]

Reasons why people won't invest right now: Crypto crashing, Record inflation, Bear market fears, Rising interest rates, Housing bubble talk, but maybe, these are reasons to invest now.

[thibaultlibat]

The 450 billion dollars figure for Rockefeller is not 1 billon adjusted for inflation, but 3% of US GDP adjusted for current US GDP

[ISpitHotFiyaa]

It's also worth mentioning that it's only relatively recently that broad-based low-fee index funds have been a thing. You couldn't just dump all your money into SPY in 1920 and get the S&P 500 return. You either built a diversified portfolio yourself (which cost you a lot in commissions and fees - thus lagging the broader index by a few percent) or you took a lot of idiosyncratic risk with a non-diversified portfolio (which you still paid lots of commissions and fees on compared to today). This matters more to ordinary people than to billionaires but it's an important thing to keep in mind any time anyone uses the S&P 500 as a metric. For most of history getting "market" returns was difficult.

[bobleglob]

I love how you don't mess around with a tedious and annoying intro. you just get right into it.

[insideredgemma]

Plot twist: John D Rockefellers head is actually cryogenically frozen in the basement of the Rockefeller centre.