Hi, reader!
Trivia for today: There are some strange laws in various cities across the world. In one city in Georgia (Gainesville), it is illegal to eat [what food] with a fork?
With that, welcome to the 89th newsletter! This one is all about Inheritance.
A book.
Die with Zero: Getting All You Can from Your Money and Your Life by Bill Perkins
This book shared the concept of memory dividends, which I liked so much I wrote a newsletter about it.
In the book, Bill presents a contrarian view about how to think about our finances as we age. The ‘standard view’ has always been, if you manage your finances appropriately, your net worth will increase throughout your life until you die (like the first chart below). Personally, I have always subscribed to this view.
What the author advocates is that we should be doing the complete opposite. He argues that we should be spending our money in the prime of our life (between ages 45-60) where we have money to spend and our health to enjoy what we are spending it on. His net worth curve plateaus at around age 55 and drops steadily from there (like the chart below).
He reasons that the point of life is to experience it. Not to save as much as possible until the very end.
A thought.
My first thought while reading the concept of watching my net worth drop to zero was; That. Is. Crazy!
What about my kids? I want to leave them something!
What about charity? I’d like to leave them something!
Then I started thinking about it more. If Whitney and I live until we are 90, that means our kids are in their 60’s (whoa, weird image). By then, our kids have already built a life. They’ve purchased their house. They’ve had a career and possibly retired. They’ve saved for college for their kids and paid off debts. Receiving an inheritance at age 60 doesn’t really change their life.
But what if we had given it to them (thoughtfully) at age 25? We would be in our 50s. They might be buying their first house. Or trying to pay off student loans. Or trying to start a business.
The money would be much more impactful to our kids at age 25 than it would be at age 60. And if we plan to give it to our kids in the future, why are we waiting?
The same can be said about charity. Upon my death, I plan to fund research to help find a cure for ALS. But when would it better for the ALS research team to receive that funding?
In 2038, when I’m 50?
or
In 2078, when I’m 90?
If I give in 2038, I now let my money have 40 years of impact on ALS research versus waiting until I’m dead. Sure, I might not be able to donate as much in 2038, but why am I waiting 40 years to donate to a cause I already know I want to give to? The money could do a lot of good now. It could save someone’s life. It could save my life.
What do you think?
A quote.
“First of all, yes, you can certainly leave money to the people and causes you care about - but the truth is that those people and causes would be better off getting your wealth sooner rather than later. Why wait until after you die?”
- Bill Perkins
Answer: It is illegal to eat fried chicken with a fork. Gainesville, GA is known as the “poultry capital of the world” and in 1961 enacted this law to gain publicity for the city.
I just finished this book, and you covered the broad points. These points challenged my thinking also and prompted good conversations with my wife. Thanks for recommending the book…now, I have to sort what to do with the new perspective!