Today, Mak and G look at why saving and understanding money is important, how people become millionaires and the challenges of managing your inheritance properly…
This episode, we look at why saving and understanding money is so important and share some surprising facts about the Irish and their money.
We also talk about how people become millionaires and how others have squandered away millions of dollars of inheritance only to be left right back where they started…
Cornelius Vanderbilt had a great quote: “Any fool can make a fortune. It takes a person of brains to hold on to it after it’s made.”
“Vegas does about 6.4 billion dollars of gambling revenue a year, and Macau does 28 billion dollars.” – Mak
“You must spend less than you make, you need money to invest it.” – Mak
00:34 – Our weekly market updates.
01:16 – How a country’s rating of savings is calculated, and where we rank.
02:36 – How important saving is and how to become a millionaire.
04:00 – How Cornelius Vanderbilt became the richest man of his time.
05:53 – How Cornelius’s son lost his father’s fortune.
07:38 – The importance of managing your inheritance properly.
Connect with Ben Jones:
GRANT: Como es dyes equals konnichiwa.
DAD: Okay, welcome back to Money With Mak And G. Today we’re going to talk about the market. Why saving it and understanding money is so important and surprising facts about the Irish and their money. Don’t forget to like, subscribe and comment for us and tell us what you like and maybe don’t like and we’re gonna go ahead and start with the markets. The Dow is up slightly again by a small margin while the s&p and NASDAQ fell almost a percent after the prior week’s nice climb. So it’s the Dow, s&p and NASDAQ at first, second, third place in gains for the year but bitcoin is currently up the most at over 100%. And yeah, my day trading was negative for the first time this year. And let’s not forget about Apple. Apple is down 10% year to date. So crazy days, lots of change. And the market, what’s the market do guys?
BOTH: Goes up and down.
DAD: Now we got a story to tell. And St. Patrick’s Day was here last week by the look of the Irish I tell you. And we want to go ahead and start there. Mak why don’t you start with a story?
MAK: Okay, well, Dad took a look at how well the Irish do with money. They do have leprechauns guarding pots of gold under the rainbow, right? And they sure know how to drink and make a great cereal.
DAD: Always after me lucky charms.
GRANT: But are they any good with money?
MAK: Well, you have to first ask the question of the iris save any money. You can’t have it and invest it unless you save it.
GRANT: Get this the right number two in the world behind Macau and savings. Macau is interesting because it’s just west of Hong Kong about 30 miles in China. And it’s known for gambling and tourism. Any idea how it compares to Vegas? Vegas is big, right?
GRANT: Well, Vegas does about $6.4 billion of gambling revenue a year. In Macau, just $28 billion. That’s over four times the revenue of Vegas. Pretty impressive also.
DAD: And the ratings for savings comes from how much is saved as a percent of how much money is made within the country in a year. Any idea guys where the US might be? You think it would be pretty good since we’re a pretty rich country, right? However, we rank all the way down at number 100.
MAK: Well, that’s interesting. So how important is saving?
GRANT: First, it’s a pretty simple equation. You must spend less than you make. It’s rule number one, because you need money to invest it. We have a pretty good amount of individuals who have saved and invested who became millionaires in the US. And we covered the keys to becoming a millionaire when covering various books like The Millionaire Next Door. So how many millionaires do we have? There are about 12 million people in the US who have that designation. And it takes time. Of the people that were surveyed only about 5% did it under a decade, and the average was almost 30 years of work, planning, saving and investing. The states with the most millionaires are tilted towards the state’s with the most people. Number one is California, then New York, Florida, Texas, and then Illinois. That shouldn’t be so surprising. But what is surprising is that 50% of millionaires live in neighborhoods with a household income of less than $75,000. And would you believe that 60% live in houses that are valued less than $500,000?
DAD: So why do we come back every week in most weeks, we release multiple episodes about making money and caring for it, because it’s important to learn about it, keep it and protect it. Having money requires patience and discipline. There was a guy many years ago named Cornelius Vanderbilt who said, “Any fool can make a fortune. It takes a person of brains to hold on to it after it’s made.”
MAK: It’s funny that he said that because when he died in 1877, he was the richest man in the US and possibly the world. The Bazos or Gates or Elon of his time. If you haven’t heard of Mr. Vandervelde, you probably should have. He was a pretty amazing, critical part of the US economy and helped build the infrastructure to help it grow. Quite a few people know about Vanderbilt University, which bears his name and we almost had our cousin go there for medical school.
GRANT: Cornelius was born into a humble family, which were farmers, but his father raised money running a ferry between Staten Island in Manhattan as well by moving cargo. I guess Cornelia saw an opportunity and went into business for himself and became one of the country’s largest steamship operators in the country. During the Civil War he donated his largest and fastest steamship Nan, fitting enough the Vanderbilt to the Union navy. It cost $1 million to make and was used to chase down Confederate Raiders.
DAD: Now he got named the Commodore and was fiercely competitive and ruthless, which earned him numerous enemies. In the 1860s. He began another empire in railroad transportation, which he had made more efficient and earned a lot of money along the way.
MAK: Now, after the Commodore died, he left a bulk of the fortune to his son, and the communist descendants built the largest privately owned home in the United States with 250 rooms called the Biltmore Estate in Asheville, North Carolina.
MAK: Why is that important? Well, because of this little story. About 80 years after the Commodore’s death, 120 descendants had a family reunion at Vanderbilt University.
DAD: Okay, side fact. The school’s athletic teams are called the Commodores. I thought that was pretty cool, huh?
MAK: Okay, background point. Out of those 120 descendants, there was not one millionaire in the crowd, even though the Commodore left more than $100 million to his son and should have grown many times over the years. So what happened?
GRANT: About six years after the Commodore’s death, the family was spending large amounts of money, they wanted to be accepted by the New York elite. They’re considered new money, which means they have recently earned their money.
MAK: That’s true, however, is different from old money, which was passed from generation to generation through inheritance. At the time, if you’re a new money, you weren’t as well respected. Were to think about as all the people who talk about like Buffett, Gates, Jobs, Elon, Bezos and more are all new money. Anyway, they weren’t ever asked to social gatherings like large dances or balls. So what did they do? They took three years to build the biggest mansion in New York and have a magnificent vendor built ball. After three years of instruction, which cost over $70 million in today’s money, they invited 1000 of the most elite people in New York, and spent over $6 million dollars on the party. Needless to say, it wasn’t worth it. And the spending never really stopped.
DAD: Kind of like the built more just spending and spending. Now since history often repeats itself. It’s something we have to think about. Over the next few decades, there’s going to be over $68 trillion passed from Baby Boomers, yeah, boomers, to millennials. It’s the biggest transfer between generations that we’ve ever seen. Those who aren’t prepared, uneducated and insecure about money, like the Vanderbilt clan, will simply waste the amazing gift they will be given. Instead of building for the future, fancy cars and homes will be bought and the money will be wasted on luxuries.
MAK: But on the opposite end of the spectrum will be those like us who will be prepared. We will respect it and make those who have given it to us proud and treat it as sacred. Because it represents 30 years of hard work, patience and persistence. We will not squander it and we will make things better for generations to come. Hey, the Commodore, though a great businessman wasn’t said to be a great father. So it may not be a surprise that his children weren’t prepared for what was to come and simply birth the money.
GRANT: Most people aren’t ready for a large amount of money to simply drop in their lap. About 70% of lottery winners are people who get large sums of money, go bankrupt within a couple of years. That’s why it’s important to learn now. Not only what should be done, but also what should not be done, read, study and work at it. I firmly believe there will come a day when we will see commons that a simple yet powerful message will be valued by many. And I hope that you’re one.
DAD: Today I’m going to think a bit about the Commodore, future generations that can be empowered, and how a little preparation can go a long way. Thanks for being here. And please like, subscribe and comment on the podcast so we can continue to touch as many people as possible and help guide them to a stronger, brighter future for us all. Thank you.