You will come away with a very different idea as to what family wealth is all about. It is not stodgy. Not boring. Not moss-backed and reactionary. On the contrary, it is the most dynamic, forward-looking capital in the world. The essential guide to passing wealth from one generation to the next, Family Fortunes is filled with concrete, practical advice you can put to use right away. BILL BONNER is President and CEO of Agora Publishing, one of the world's largest financial newsletter companies. He is the creator of the Daily Reckoning , a financial newsletter with more than 540,000 readers of six different global daily editions, including French and German. Bonner is coauthor of the international bestsellers Financial Reckoning Day and Empire of Debt with Addison Wiggin, as well as Mobs, Messiahs, and Markets (coauthored with Lila Rajiva), the New York Times bestseller . In 2011, he wrote Dice Have No Memory: Big Bets and Bad Economics from Paris to the Pampas. He files his Daily Reckoning dispatches from a ranch in Argentina, the home office in Maryland, various joint ventures, and other hot spots around the globe. WILL BONNER is Executive Director of the Bonner & Partners Family Office, an independent estate planning and investment research group. Will got his start working in the "mailroom" of the family business, Agora, at age eleven. Later, he helped launch, and served as CEO of Early to Rise, a leading self-improvement publishing business. In 2007, he opened Agora's South American office in Buenos Aires, Argentina, and set up a successful business partnership that is one of the largest investment research and education companies publishing in Spanish. He is a graduate of St. John's College's Great Books program, earning a double major in philosophy and mathematics. Bonner lives with his wife and two children in Delray Beach, Florida. He's the eldest of Bill's six children.
What separates the rich from the rest of us?
Hemingway claimed it was the fact that they had more money.
Recently, we drove through a working-class neighborhood of Baltimore, called Dundalk. It is an area of simple one- and two-story wooden houses on small lots. Fifty years ago, it was where Baltimore's industrial labor force lived. The residents worked in heavy industries for companies such as Bethlehem Steel, General Motors, and the B&O Railroad and at the busy harbor.
Today, those high-wage industries are mostly silent and rusting. Some sites along the water have been converted into loft apartments for Baltimore's young professionals. And some of the children and grandchildren of the older residents have moved away - to the suburbs or to other cities.
But most of them are still there. Their parents and grandparents earned a good living. But few got rich. And now, few of their descendants are rich, either.
Across town, in the rich "old" northern suburbs of Roland Park and Ruxton, the people are different. The rich left the city many years ago. But in these green suburbs, they remain. Some richer. Some poorer. But by and large, they're the same people whose parents were there 50 years ago.
What accounts for it? How come some families stay rich generation after generation, while others never have a nickel?
"Culture," you will say. "Education," perhaps. You won't be wrong. But what, specifically, about culture and education is it that makes such a big difference in outcomes?
The secret is simply this: The rich take the long view.
Let me ask you something. If you thought you'd live forever, would you do anything differently? Wouldn't your attitude toward your money change a little? Wouldn't you slow down, realizing that you're not in such a hurry to make money? And wouldn't you reduce your spending, too, knowing that your money would have to last you a long, long time?
If you look carefully, almost all Old Money secrets can be traced to a single source: a longer-term outlook. The truly wealthy are careful to spend their money on things that hold their values over time.
It's why they do not trade in and out of investments. Instead, they find a few positions and stick with them - for decades.
It's also why they prepare their families, over the course of many, many years, so that they will be prepared for the challenges of managing and enlarging the family wealth.
It's why they invest in education and training. And why they make sure family members add to their collective wealth, rather than subtracting from it.
It's why they try to guide their children to suitable spouses. They know that a rotten apple will spoil the barrel.
It's why they spend time and money on lawyers and accountants, too, making sure that the structures are in place to pass along wealth and protect it.
It's why they prefer deep-value assets over momentum investing. Over time, value rises to the top. Momentum slows.
It's why they will wait a long time - many, many years - for the right investment at the right price.
It's why they like investments with long-term payoffs, such as timber, mining, and infrastructure. And it's how they are able to benefit from compound growth, letting relatively modest gains grow over several generations.
It's why they are almost fanatical about eliminating costs: taxes, investment charges, and unrewarding living expenses. They know that wear and tear, over time, will wreck their family fortunes.
It's why they develop long-lasting partnerships with the professionals they need to make sure their interests are protected and their plans are carried out.
It is all a matter of time. Th