> If you have $14 million (or $10 million, which is what this family had after taxes) you > don't need to search around for moneymaking schemes like investing in precious > metals and hoping they go up. You don't need to make money. You already have it!
In 2001, I read that Bill Gates bought a significant part of Pan American Silver for $3.45 a share. I bought a bunch of it myself around $3.15 a share (it declined after he bought it) PAAS is now trading at around $37 a share. Gates sold it several years ago, I think for an 800 or 900 percent return. Coincidentally, Gates bought $10 million in Pan American.
Back in 1998, Warren Buffett bought 129 million ounces of silver for $500 million. Buffett owned the largest above-ground supply of silver in the world. It helps to understand the characteristics of precious metals markets. The US had two billion ounces of silver in 1959. That went down to zero in the 1990s. A lot of silver is consumed; unlike gold which tends to stay around in one form or another.
Warren Buffett has a reputation as a conservative investor. Bill Gates has a reputation as a shrewd investor. It's interesting that both chose silver, one in physical form and the other in the form of a producing company.
> All you have to do is put your money in nice conservative investments.
Citigroup, American International Group, Bear Stearns and Lehman Brothers were conservative investments for many, many years. Until they all cratered. There are fundamental reasons why gold and silver have done so well in the past decade. One of them is the repeated recklessness of governments and their out-of-control spending, either current or in the form of future promises.
If you have $14 million (or $10 million, which is what this family had after taxes) you don't need to search around for moneymaking schemes like investing in precious metals and hoping they go up. You don't need to make money. You already have it! All you have to do is put your money in nice conservative investments. And not buy $200,000 horses and $5 million houses.
It's certainly not enough to live a $100-million lifestyle with no money continuing to come in. If you spend half as though there's no tomorrow and invest the rest unwisely.....yeah, it can be gone in a heartbeat. Happens in Hollywood all the time.
I know a lady whose husband went to work there after being laid off at another high-tech company and they were considering his retirring after working there for a few years. They had enough to buy a new house in San Fran, put their son through college and a relative's son through college.
There are those that hit it big but there are far more that don't get there. Some of it is timing. If you got in when the price was very high, it might take longer.
I do know kids that got hired during the internet boom, and bought expensive cars and then the bubble popped. Fortunately for them it was only cars and not houses.
I've worked with people that got into eight and nine figures. I've met one of our former managers in ten. The eight and nine figure guys can be terribly ordinary. I used to chit-chat with one of them about the Boston Celtics in his very small office.
The stock options at Google vested over four years, with one eighth available six months after the IPO. That's instant enough, and a lot of the Google millionaires ended up with well over a million dollars worth of stock options. Way over a million. In the eight figures. Enough to significantly affect real estate prices in Atherton, a wealthy suburb near Google. And yet those millionaires managed not to throw away their money.
Well, stock options usually don't create real instant millionaires. Stock options vest over a period of time - typically from four to ten years. Also, in Silicon Valley, a million bucks doesn't buy you as much house as you'd think it does. I have seen people that got rich on paper during the internet bubble, and then watched it deflate. You also have to be wise enough (luck works just as well) to cash out at the opportune time.
The folks in Silicon Valley at the companies that are doing well typically have skills useful to their employers and other companies.
I know lots of people that became millionaires where I work and don't know of any that are in trouble. That's because we had a deep recession in the area a few decades ago that left a lasting impression on the folks here. I don't know any that own horses or mansions. Really nice houses, yes. But we try not to go overboard up here.
$14 million would make for a headache in figuring out where to put it. I often have trouble figuring out where to put our current assets. I certainly wouldn't trust a mutual fund manager or banker. There are maybe a handful of people that I'd trust on advice and that's only because I've known them for a while.
Do people who suddenly acquire fortunes usually waste them? I live in Silicon Valley, where companies create instant millionaires. Google created hundreds of them. I know some instant millionaires. All are quite satisfied with their instantly-acquired wealth, and have not wasted it like this feckless family. BCEagle, I don't imagine you'd turn down an instant $14 million , and I don't imagine you'd waste it either.
These people just enabled one another. The reality is that you're not going to be solvent at any level for very long when you are spending more than you are earning each year.
> And he recites a quotation he holds dear : "The measure of a man is not whether he falls > down, but whether he gets up again."
I have another quote for the gentleman: Harry Callahan: A man's got to know his limitations
I do think that it is far better to struggle and work for your wealth than to get it all at once. At least you're managing it as you're wealth is increasing. You see the effects of tax policy and your spending, saving and investing decisions. This guy got all this money gratis. When you struggle to make it over many years, you take much better care of it because you know the amount of sweat that it took to make it in the first place.
It's interesting that the rest of the family isn't helping them out as it would be a small fraction of their wealth just to get this family reasonably back on their feet. My siblings are all managing their finances well so that's not an issue with us but I'd be inclined to help them out if they had major problems.
@SLS- Sorry about that. I'm not all here today (dorm needs to turn on the heat so I don't wake up 20 times a night shivering :p). Plus, I've been spending too much time on the FA forum where people are complaining that their $400k annual income puts them out of range of financial aid. WAHH. >.<
-- Edited by romanigypsyeyes on Monday 29th of November 2010 02:38:13 PM
The good news is that they will likely get good financial aid when they need it.
Um... how do you suppose this? He still makes a decent living and they have a multimillion dollar extra home in their name. That property alone puts them out of FA range.
No wonder he didn't have a bigger stake in the company...
I was prepared to be somewhat sympathetic, but this family wasn't affluent, it was rich rich rich beyond the dreams of avarice and yet managed to waste fourteen million bucks. This is spectacular financial incompetence.
Having a much lower standard of living than we did just a few years ago, we are still vastly ahead of this family.
I found the article interesting. This family received a $14 million dollar inheritance ($10 mil after taxes) and literally has nothing left after a decade.
Bad investments, overspending and yeah, OVERSPENDING caused them to lose everything. They spent almost $200K for a horse. They spent almost 6 million dollars to restore two properties. Come on, that's...lunacy.
When things went bad, they sold an Aston Martin car for almost $400 K. I can't imagine what the insurance payments must have been for that car.
This family is getting loan modification for their home and will still also likely lose it. The good news is that they will likely get good financial aid when they need it.
If I win the lottery tomorrow, there are things I would absolutely love to do. Still, making sure there was some financial security would be the ultimate best thing for my family.
, and I don't imagine you'd waste it either.
