What career path does “old money” follow? Advice on building generational wealth from finance…
Incoming FT in IB. Most of my analyst class/ even MDs I work with are upper middle class. Obviously the money is good, but it isn’t exactly the path to building generational wealth. It seems like sticking with IB/PE/Corp Dev really all leads to similar wealth levels. Therefore I’m interested in what have people seen for exits that’s been “lifestyle changing”
Generational wealth doesn't come from employment, it comes from owning assets.
1000% this. Parents live in a neighborhood full of people who have generational wealth (assets / businesses own). Some of their kids barely work and just get passive income / help out with the family business here and there. The trick is owning businesses that can be held by any regular college / HS grad and not something that would require specialization (like law, medicine for example).
Generational wealth is created by someone getting really lucky and joining a growing organization. There’s no alternative really. Lots of people work hard, but the only way to blow it out of the water is taking some risk on a new venture and/or having some sort of equity component.
The reason being, ultimately to have wealth that really holds across generations, you need passive income that is so high it can be split a few times and continue to give off a liveable passive income. To the above persons point, generational wealth ultimately becomes a game of managing assets and just adding on top of the pile because your passive income grows at a rate that exceeds what you are spending. Two examples:
-Let’s say you can stay inflation protected and have 4% income each year. (This is a big assumption, but let’s just say it’s true)
-if you have 10m of assets, 400k can be lived off. If you are smart, maybe you live off 200k, so 200k each year adds on top of the 10m. However, this still likely isn’t “generational wealth” because if you have 2 kids, it ends up being 5m each and then they will need to live under 200k otherwise they will eat into the principal.
-now let’s say you have 50m of assets. Then 2m a year is given off the 50m and if you are living off 300k, 1.7m adds on top of the 50m each year. Over a lifetime this furthers the amount of assets managing.
-then you die, get taxed about half, split it to two sons and now it’s probably no longer generational wealth.
Generational wealth requires:
"even MDs I work with are upper middle class"
Unless you mean their upbringing, this is one of the most out of touch things I've heard
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