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Old 02-10-2011, 11:06 AM
 
Location: NC
10,009 posts, read 8,109,870 times
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Quote:
Originally Posted by Themanwithnoname View Post
Let me put it another way: less than 1/50th of a population is IN NO WAY "reasonably prevalent"... No matter what else you say.
Ok, I think we are talking about apples and oranges here. You seem to be talking about the entire population of the United States. I on the other hand am referring to a certain sub-group, the wealthy, because that is what I thought you were referring to in your post. I thought you were implying that among the wealthy 'old money' is statistically insignificant, or very rare.

Out of that sub-group 'old money' is most definitely a minority, but it is reasonably prevalent, within that subgroup. Among the general population the wealthy, in general, cannot even be considered prevalent.

Last edited by Randomstudent; 02-10-2011 at 11:15 AM..
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Old 02-10-2011, 11:24 AM
 
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Quote:
Originally Posted by Randomstudent View Post
Ok, I think we are talking about apples and oranges here. You seem to be talking about the entire population of the United States. I on the other hand am referring to a certain sub-group, the wealthy, because that is what I thought you were referring to in your post. I thought you were implying that among the wealthy 'old money' is statistically insignificant, or very rare.

Out of that sub-group 'old money' is most definitely a minority, but it is reasonably prevalent, within that subgroup. Among the general population the wealthy, in general, cannot even be considered prevalent.

IF wealth were passed down as a rule (If it were prevalent in ANY WAY), there would be a gradual increase over generations.

To where there would be a larger % of the wealthy, AND a larger % of 'old money'

Obviously nether is the case.

In no way Prevalent, even among the wealthy (Hense the reference to the book 'The Millionaire next door'... they address it if you had read it...)
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Old 02-10-2011, 11:38 AM
 
Location: NC
10,009 posts, read 8,109,870 times
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Quote:
Originally Posted by Themanwithnoname View Post
IF wealth were passed down as a rule (If it were prevalent in ANY WAY), there would be a gradual increase over generations.

To where there would be a larger % of the wealthy, AND a larger % of 'old money'

Obviously nether is the case.

In no way Prevalent, even among the wealthy (Hense the reference to the book 'The Millionaire next door'... they address it if you had read it...)
Wealth is not passed down consistently among all people, but it is passed down more consistently among the wealthy, and as a general rule wealth among the wealthy is passed down. However, one economic collapse, ugly divorce, or profligate generation can wipe it out. That is why the number of people with inherited wealth are kept in check, it is not because people with money don't gradually pass down their wealth generally.

In the millionaire next door chapter one suggests that 80% of millionaires are 1st generation affluent. That suggests that the other 20% are inter-generationally wealthy. As I said 1/5 is reasonably prevalent, not a majority, but significant.
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Old 02-10-2011, 11:49 AM
 
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The "new money" are also often referred to as the "nouveau riche"...and yes,they are usually more into the "conspicuous consumption" that is more revealing of wealth..
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Old 02-10-2011, 11:50 AM
 
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Quote:
Originally Posted by Randomstudent View Post
Wealth is not passed down consistently among all people, but it is passed down more consistently among the wealthy, and as a general rule wealth among the wealthy is passed down. However, one economic collapse, or profligate generation can wipe it out. That is why the number of people with inherited wealth are kept in check, it is not because people with money don't gradually pass down their wealth generally.

In the millionaire next door chapter one suggests that 80% of millionaires are 1st generation affluent. That suggests that the other 20% are inter-generationally wealthy. As I said 1/5 is reasonably prevalent, not a majority, but significant.
Discounting your 'bait and switch' right there, with your flawed "1/5th" NOT being the topic at hand...
(Which destroys your premise)

ADDITIONALLY destroying your numbers are:
Inheriting 1 mil from your parents, when the current housing market makes that pretty easy, to say nothing of the net worth of small businesses... Detract that, and what remainder is 'old money'? I don't know, but it is HARDLY 'significant'...

Quote:
Old money applies to those of the upper class whose wealth separates them from lower social classes. According to anthropologist W. Lloyd Warner, the upper class in the United States during the 1930s was divided into the upper-upper and the lower-upper classes.[3] The lower-upper were those that did not come from traditionally wealthy families. They earned their money from investments and business rather than inheritance. In contrast to the nouveau riche, the upper-upper class was families viewed as "quasi-aristocratic" and "high-society".[3] These had been rich for generations. They lived off idle inheritances rather than earned wealth.
Quote:
Originally Posted by Randomstudent View Post
Wealth is not passed down consistently among all people, but it is passed down more consistently among the wealthy, and as a general rule wealth among the wealthy is passed down. However, one economic collapse, or profligate generation can wipe it out. That is why the number of people with inherited wealth are kept in check, it is not because people with money don't gradually pass down their wealth generally...
This combination of statements are illogical. If it were, 80% of millionaires wouldn't be 1st generation!!!
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Old 02-10-2011, 01:02 PM
Status: ""Abortion Stops A Beating Heart!"" (set 5 days ago)
 
Location: Kansas
18,288 posts, read 12,022,307 times
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Default Living Off Your Parents Is Living Off Your Parents

I don't think that intention makes a difference as in, going to college some how makes you more of a responsible person. Many of the college educated are not getting jobs and continuing to live off their parents. While it is ultimately the parents choice, putting down one group and not the other seems unfair because living off your parents is living off your parents. I am thinking too that as an employer, I would be more impressed with someone that held a part-time job. Our older son went to college and funded it through his weekend Army Reserve checks, scholarships and loans which he paid back when he went active duty. He had no money to party so finished college in just 3 years going year round. He went for an education not a social life. I have another relative who lived at home with his mother and did odd jobs when he needed funds and was a great help to his mother who wanted him at home. Is one better than the other? One more of a success than another?
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Old 02-10-2011, 01:45 PM
 
Location: NC
10,009 posts, read 8,109,870 times
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Quote:
Originally Posted by Themanwithnoname View Post
Discounting your 'bait and switch' right there, with your flawed "1/5th" NOT being the topic at hand...
(Which destroys your premise)

ADDITIONALLY destroying your numbers are:
Inheriting 1 mil from your parents, when the current housing market makes that pretty easy, to say nothing of the net worth of small businesses... Detract that, and what remainder is 'old money'? I don't know, but it is HARDLY 'significant'...




This combination of statements are illogical. If it were, 80% of millionaires wouldn't be 1st generation!!!
I don't think you are being realistic, it is not "pretty easy" to inherit 1mil from your parents. Wealth in homes are canceled out by the 44.4 million mortgages, not to mention you would likely need several homes without mortgages to reach 1mil as the median home price in the Northeast (the most expensive region) is 237,000. Fact of life, in America net wealth is extremely concentrated at the top, as a result there just aren't a lot of people who are wealthly.
In addition to this, small businesses often die, or are sold by their original proprietors, due to retirement. A lot of the reason 80% of millionaires are 1st generation is because of their age. Again in the first chapter of the millionaire next door it says the typical millionaire is in his mid 50s. That is when people tend to reach peak wealth before they retire. After that their wealth will likely decline during retirement due to loss of income and health care costs.
Furthermore, if your income is from intergenerational wealth it is more likely to be in the form of trusts, and real estate income. As a result of this, you are not going to face an income decline during retirement nor are you really burning your principle at any time. In addition to this there are also tax issues that will impact people who realize gains on the sale of assets, e.g. when they sell off a business, that will not impact people who never their sell assets e.g. an intergenerational trust, or piece of lucrative real estate. It is self perpetuating and easy to pass on, unlike many 1st generation millionaires, who as the millionaires next door book suggest have their income tied in large part to their small business holdings and assets theirin. As a result their money often doesn't last long enough to be passed on as opposed to someone with a trust where the original trust isn't touched and probably got bigger. It is because of this that I would think the 1/5 figure is probably more accurate then you assume.

Last edited by Randomstudent; 02-10-2011 at 02:31 PM..
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Old 02-10-2011, 02:48 PM
 
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Quote:
Originally Posted by Randomstudent View Post
I don't think you are being realistic, it is not "pretty easy" to inherit 1mil from your parents.
I disagree.
A Million bux ain't what it used to be:
The Experts Weigh In (http://ww-success.com/blog/index.php/2010/03/29/the-experts-weigh-in-%E2%80%93-a-million-dollars-is-not-enough-to-retire/ - broken link)

Quote:
Originally Posted by Randomstudent View Post
Wealth in homes are canceled out by the 44.4 million mortgages, not to mention you would likely need several homes without mortgages to reach 1mil as the median home price in the Northeast (the most expensive region) is 237,000.
HOPEFULLY (I know there are too many exceptions) you should be mortgage free long before retirement. My grandparents have had their homes paid off since before they were 50, and my parents paid theirs off in their 50's.
Add to this (call it ranging froma Quarter to half a million JUST in the house) and you can see where it'll get pretty close to a mil pretty fast.


Quote:
Originally Posted by Randomstudent View Post
Fact of life, in America net wealth is extremely concentrated at the top, as a result there just aren't a lot of people who are wealth.
Agreed

Quote:
Originally Posted by Randomstudent View Post
In addition to this, small businesses often die, or are sold by their original proprietors.
Agreed. which ether passes on the family business or what it is worth, or gives the business owner the cash from both the value of the business, but also the property (Oftentimes worth more than the business)

Quote:
Originally Posted by Randomstudent View Post
A lot of the reason 80% of millionaires are 1st generation is because of their age.
Point? It would seem this would put it in my corner as they are closer to 'passing it on'


Quote:
Originally Posted by Randomstudent View Post
Again in the first chapter of the millionaire next door it says the typical millionaire is in his mid 50s. That is when people tend to reach peak wealth before they retire. After that their wealth will likely decline during retirement due to loss of income and health care costs.
You missed the part in the book where it talked about them continuing to reinvest.

My grandparents (now nearing their 90's) have INCREASED their wealth since retirement.
Quote:
Originally Posted by Randomstudent View Post
Furthermore, if your income is from intergenerational wealth it is more likely to be in the form of trusts, and real estate income.
While that is an assumption... I'll let it slide.
I also don't see any relevance.

Quote:
Originally Posted by Randomstudent View Post
As a result of this, you are not going to face an income decline during retirement nor are you really burning your principle at any time.
Incorrect. Trusts, just like IRA's, 401K's and anything else appreciate and depreciate like anything else. It's not some magic golden goose.
(As you must know when you talked about things wiping out assets a couple posts ago)


Quote:
Originally Posted by Randomstudent View Post
In addition to this there are also tax issues that will impact people who realize gains on the sale of assets, e.g. when they sell off a business, that will not impact people who never their sell assets e.g. an intergenerational trust, or piece of lucrative real estate.
Real estate gets taxed, and (Since we are referencing 'the book' so much, you must of missed the chapter about people 'transforming themselves' and not being millionaires upon their death.
Additionally the 'Bush tax Cuts' allowed up to a million to be transferred IIRC.
Allowing people to pass on the family farm, or family business
Quote:
Originally Posted by Randomstudent View Post
It is self perpetuating and easy to pass on,
FALSE, (See above)
Quote:
Originally Posted by Randomstudent View Post
unlike many 1st generation millionaires, who as the millionaires next door book suggest have their income tied in large part to their small business holdings and assets theirin.
FALSE. (See above)

Quote:
Originally Posted by Randomstudent View Post
As a result their money often doesn't last long enough to be passed on
Unfounded assumption
Quote:
Originally Posted by Randomstudent View Post
as opposed to someone with a trust where the original trust isn't touched and probably got bigger.
Unfounded assumption, and a likelihood that YOU disallowed in that earlier post.
Quote:
Originally Posted by Randomstudent View Post
It is because of this that I would think the 1/5 figure is probably more accurate then you assume.
And it is because of THAT that you are wrong.


Oh, you say that you believe that 1/5th OF the wealthy are 'Old Money'
(Which had nothing to do with the original point) do you?
Try this on for size:

Quote:
60 percent of wealthy families burn through all their money by the second generation. Their research also shows that by the third generation, nine out of 10 family fortunes are gone.
A single generational transfer is NOT 'old money' Nor is the second.

Source:
Children and Wealth | Advisor One


I think we're done here.
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Old 02-10-2011, 03:33 PM
 
12,226 posts, read 25,328,887 times
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Quote:
Originally Posted by city_data91 View Post
You hear some people say how college students are selfish for living off their parents. But what's wrong with having your parents support you during college? It doesn't mean they're going to support you forever. Sure, you could get a low paying job right after high school. But you would have to live with your parents because you won't make enough money to move out. In the long run, the person that goes to college will make more money (on average, but there are exceptions). If anything, people should look down upon the person that starts working right after high school because they will probably still be working a low paying job living with their parents at 30. But when the person that went to college is 30, they will probably be making more money and living on their own. Something is wrong when someone compares a college aged person living off their parents to a 30 year old living in their parents basement. I'd say your success at age 30 is more telling than your success at age 18-21.
Let's get back to city_data91's OP please. Any posts after this one that do not have to do with this general topic may be deleted and infractions may be issued.
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