How to Protect Your Money from the Whims of Central Bankers


So how do you go about managing wealth in a world pushed and pulled by the whims of central bankers? And how do you ensure the fruits of your labour pass successfully from one generation to the next?

It’s a topic that consumes Vern Gowdie, our Family Wealth expert. The easy part, according to Vern, is the retaining of wealth. If you have enough now, he reckons, you don’t need to do anything stupid. You simply wait for the bear market (which he says is inevitable) to bring prices back down to reasonable levels before putting your capital to work again. (See Vern’s essay below, ‘Take Care to Never Follow the Herd’)

But the hard part is passing your money on in a way that is productive and beneficial for your children. In a discussion panel at the World War D conference, Vern was joined by Will Bonner, son of Bill Bonner, founder of The Daily Reckoning and Agora Financial. Bill has amassed significant wealth as his business has grown, and is very determined to pass not only his wealth on to his children, but to pass on the lessons of wealth creation too.

Will nominated two challenges for those building and managing ‘family wealth’. The first one is actually recognising it as a necessary project, rather than thinking it will just take care of itself. As Will said (we’re paraphrasing):

‘Wealth creators tend to be Alpha personalities. This personality type is at odds with diverting time from chasing profits to educating kids and building sound family wealth. In addition, it’s vital to show your kids that you are capable of mistakes — and that you are capable of learning from those mistakes…’

The biggest challenge though is instilling the drive in your children to make it on their own, despite the generational wealth that they know is on the way. Says Will:

‘You should structure your estate to make the next generation work for their wealth even if they do have certain financial benefits. You don’t want a Paris Hilton-type child who grows up with no respect for money. Studies show that people who inherit $150,000 or more tend to do worse in education, career, etc. In the back of their mind they think they don’t need to battle to achieve.’

There are very few successful family dynasties in history, which points to the difficulty of maintaining financial discipline through more than a couple of generations. The Rothschilds come to mind, but not many others.

You can read Vern’s essay about financial advice here.


Greg Canavan+
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+

Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.

Leave a Reply

Be the First to Comment!

Notify of

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to