Wealth Preservation in the long term

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stand@desk
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Wealth Preservation in the long term

Post by stand@desk »

I was pondering what wealth preservation will look like in the years to come with all the potential transformations due to technological advance, not to mention economic considerations. Years into the future will we still have trading/bank accounts? Could they be hacked or wiped out or depleted due to unforseen or forseen circumstances. I would have to think that over the rest of my lifespan and my children's there will be great challenges to preserving wealth. Maybe it will come sooner than we think or later but you'd have to think let's say in the next 50 years there should be some major issues. Just wondering if anyone has thought about this. Maybe wealth preservation is just an illusion anyway..

SimpleLife
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Re: Wealth Preservation in the long term

Post by SimpleLife »

Your fear is based on nothing. Statistically you are far more likely to lose what you have in litigation. I've been sued. In the US if you make more than 50K a year you have a 25% chance of being sued. Around 96% of all lawsuits filed around the world are filed right here in the US, where we also have 5% of the worlds population and 25% of the worlds inmates...Try a data driven approach to asset protection instead of chasing ghosts.

stand@desk
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Re: Wealth Preservation in the long term

Post by stand@desk »

@simplelife How do people in the USA live their lives without fear of being sued?

My thoughts lie in the ideas that are we still going to be holding portfolios and making trades decades down the line? I am purely speculating as it's impossible to know the future but with the massive potential disruptions based on technology I would think strategies of wealth preservation would change or could one hold the S&P 500 in an online brokerage for the next 60 years?

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jennypenny
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Re: Wealth Preservation in the long term

Post by jennypenny »

@S@D--I share your concerns. DH always says we only have X amount of money because Vanguard says we do. If we wake up tomorrow and Vanguard says we don't ... then what? We're at the point that we have 'enough' and are now trying to figure out how to diversify enough to hold onto it long term (and I don't mean diversifying within the stock market).

jacob
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Re: Wealth Preservation in the long term

Post by jacob »

@s@d - Specific strategies of wealth preservation change all the time. All you need to do to realize this is to go and pick up a book from 2010, 1990, 1970, 1950, 1930, etc. and see what kind of "long term" strategies they recommended back then. Predicting the far future of investing is like predicting the far future of technology, e.g. flying jet cars and lunar tourism.

The idea of financial securities is thousands of years old but in that span, there are periods lasting ~decades or even more than a century, where the market completely breaks down in a given area. These are quite rare in a given country but are always happening in one country or another. They're usually caused by wars, revolutions, famine, ... four horsemen type events.

It's possible to preserve wealth for centuries... http://blogs.wsj.com/economics/2016/05/ ... years-ago/ ... but it's unlikely that you'll correctly pick a strategy today that will have turned out well by 2075. At least, this kind of long-term fire-and-forget thinking has never worked before although one can of course always pick one in hindsight.

Other than accepting that your current investment preference, no matter what it is, is a fad much like styles of clothing, I don't think you need to become an expert on economies or fashion to "survive" with wealth or dress code. Most people do fine just copying voices of authority (CFPs, financial news media, bloggers) and emulating others. These guys will slowly change along with fashion. If the "best investment for the long term"-ideas in 2025 turns out to annuities, then THAT will be what's recommended by "famous youtuber" or whoever; and most people will be asking "I hear that you can't go wrong with XYZ-type annuities, which have been proven to work in the long run, so where do I go buy the best one". And then maybe in 2050, it'll be farmland. As long as you don't stick with investing in horse carriages, because a world without horses was inconceivable in 1892 with a demonstrated track record of thousands of years, you'll be fine.

In summary: You can lead the herd forward or you can follow the herd, but don't stay put behind the herd in the belief that the one truth for the future was discovered in 2010.

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GandK
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Re: Wealth Preservation in the long term

Post by GandK »

My extended family's wealth preservation strategy has always been to buy and hold large swaths of undeveloped (farm)land. The more all other assets are digitized, the more I feel like I should follow in their footsteps.

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Re: Wealth Preservation in the long term

Post by chenda »


ether
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Re: Wealth Preservation in the long term

Post by ether »

Unless your children are good business people, your money will be gone within two generations normally.
The rate of human fertility is much quicker than the rate of return of capital.

IlliniDave
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Re: Wealth Preservation in the long term

Post by IlliniDave »

I tend to not worry about the unknowable decades down the road, especially the various financial apocalypse scenarios. I think keeping a good chunk in real estate on top of readily available liquid financial investment assets (stocks, bonds, FDIC deposit accounts) is the best approach for me at the moment.

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Re: Wealth Preservation in the long term

Post by jacob »

@chenda - Awesome. I'm seriosuly enamoured by institutions that manage to survive that long. I've never heard of this one. 900 years is very impressive. I'll add it to my list.

@ether - Usual rule: wealth is preserved in the second, lost in the third. de Medici's are an exception to that.

@iDave - That's likely the best strategy now. I wouldn't expect it to still be the case in 2040 ... but hopefully that'll be enough time to switch around.

IlliniDave
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Re: Wealth Preservation in the long term

Post by IlliniDave »

jacob, I hope conditions persist a tad longer than that. By 2040 I'll be in my upper 70s and probably too feeble to learn a new game!

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Re: Wealth Preservation in the long term

Post by jacob »

@iDave - I really doubt the conditions will. However, I'm sure popular sentiment will be suggesting something else [already] at that point. I think going with popular recommendation, or rather being 10% better informed than popular recommendation, is the best long term strategy. So pay some attention and spend slightly more time than the average person but not a whole lot more time. At least that's what I try to tell DW should I get hit by a bus---go see some professional. I think once I get old/senile enough, and start yelling for kids to git off ma lawn, I'm gonna punt and go for annuities(*). I hope I'll do that before I fail to recognize the/that mental crossover point. My main worry in this regard is that I won't.

(*) Of course, that's 2015 plan.

IlliniDave
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Re: Wealth Preservation in the long term

Post by IlliniDave »

jacob, one of the redeeming factors about being my age and my length of working years is that I got grandfathered into a pension plan (which I'll receive as an annuity) and have a lot of SS credits. Assuming those don't collapse completely, that should keep me from living under a bridge. If they do vaporize I'll probably attempt to partially replace them with annuities. Annuities get a bad rap sometimes but I think they can fill a role for some folks and are too often overlooked. There's some hope that with the new DOL fiduciary rules that better annuities will become more readily available. My gut feel is that the only thing that really could be threatened for me is my legacy ambitions, and if that starts getting shaky I can always start giving it away early if the world starts sucking it out of my wallet. The Joe Six Pack plus 10% is probably a good strategy!

cmonkey
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Re: Wealth Preservation in the long term

Post by cmonkey »

IlliniDave wrote:jacob, I hope conditions persist a tad longer than that. By 2040 I'll be in my upper 70s and probably too feeble to learn a new game!

At the very least, hopefully a community like this one will still be around and we can all 'stay ahead of the game' together.

SimpleLife
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Re: Wealth Preservation in the long term

Post by SimpleLife »

stand@desk wrote:@simplelife How do people in the USA live their lives without fear of being sued?

My thoughts lie in the ideas that are we still going to be holding portfolios and making trades decades down the line? I am purely speculating as it's impossible to know the future but with the massive potential disruptions based on technology I would think strategies of wealth preservation would change or could one hold the S&P 500 in an online brokerage for the next 60 years?
Liability insurance. Yes, investing in an index fund al drawing only say 2% a year over 60 years is bound to build wealth...if you surive that long....

wood
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Re: Wealth Preservation in the long term

Post by wood »

jacob wrote:@chenda - Awesome. I'm seriosuly enamoured by institutions that manage to survive that long. I've never heard of this one. 900 years is very impressive. I'll add it to my list.
Do you mind sharing your list?

workathome
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Re: Wealth Preservation in the long term

Post by workathome »

Family trees spread pretty quickly, esp. depending on the number of kids, and if you go equal-share it's impossible to prevent eventual dilution.

bryan
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Re: Wealth Preservation in the long term

Post by bryan »

Token future prediction of wealth growth: crypto-currency. Companies that get into this space (embedded systems, financial services 2.0, prediction markets / insurance, digital property rights).
SimpleLife wrote:In the US if you make more than 50K a year you have a 25% chance of being sued.
I suppose umbrella insurance and not hinting at or showing your wealth are the best ways to reduce this risk? I credit driving a beater car with a faded paint job and cosmetic pieces falling apart (engine ran like a top, though!) for saving me $$$ after having a minor traffic collision. If I were driving a Tesla I'm certain the other person's "injury" (full recovery at the scene as luck would have it) would have escalated to ludicrous levels.

Though small claims suing is probably the bulk of those cases? How many are <$10,000, which would hardly be a risk to your wealth? I've been threatened a few different times for sums <$2,000 but my strategy of ignoring them (okay, bring me to court) seems to have paid off.
workathome wrote:Family trees spread pretty quickly, esp. depending on the number of kids, and if you go equal-share it's impossible to prevent eventual dilution.
Someone mentioned establishing something like a trust that spits out income. Basically instead of passing the wealth, you just pass the claim on some of the passive income generated by the wealth. You could add plenty of complexity like starting the payout at certain ages and tied to their own income etc.

For another take, the book Noble House (and maybe it's prequel Tai-Pan? haven't read that one.) goes into a family inherited wealth scheme (the head of the family is the majority shareholder of the wealth) that sounds interesting.

workathome
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Re: Wealth Preservation in the long term

Post by workathome »

I don't think there's a guaranteed way around it without accumulating massive assets.

I'm financially independent, but I have 2 children. If they have I end up with 8 or more great grand-children, and my current wealth is split 8, or even 4-ways it's already too low to guarantee financial independence for all of them.

The dying aristocratic method is to give everything to the first-born, or only have one kid, etc. - but I don't think it's worked out exceptionally well for them in the UK and Europe - they still seem to end up with it diluted, and then faced political changes that ate it anyway.

On a *really* long time-horizon though, everyone has ancestors that were materially successful at some point. Those who were in poverty didn't have children, or die of starvation, disease, etc historically.

Tyler9000
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Re: Wealth Preservation in the long term

Post by Tyler9000 »

jennypenny wrote:@S@D--I share your concerns. DH always says we only have X amount of money because Vanguard says we do. If we wake up tomorrow and Vanguard says we don't ... then what? We're at the point that we have 'enough' and are now trying to figure out how to diversify enough to hold onto it long term (and I don't mean diversifying within the stock market).
That's basically why Harry Browne advocated holding allocated physical gold stored in a vault in another country.

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