Bridger Pennington argues that giving money directly to kids destroys generational wealth. Instead, set up a family bank: relatives loan each other money at low rates like 1% and require repayment. The Rockefellers did this. The Vanderbilts didn't, and lost everything.
Chapters
Will I give money to my kids? No, but I want to do this instead. This is what the Rockefellers did, and that's why they have generational wealth today. And the Vanderbilts didn't do this. They lost all their money, and most of those old families that have money don't have money anymore besides a few families that figured this out. So instead of just gifting your kids tens of millions of dollars, which would be awesome to receive as a kid, but it typically ruins their life, what they do instead is they set up a family bank. Your grandkids can can come pitch the family bank. You and the aunts and uncles are an investment committee. Let's say your granddaughter comes, she wants to do a fourplex, she wants to borrow half a million dollars. We're gonna look at as an investment committee, she's gonna have to pitch us, has a pro forma, the whole thing. Let's say we say yes, we'll give her a 1% interest rate loan. So very cheap money, but she's gotta pay us back. And if she doesn't pay us back, we're gonna remember that and she's not gonna have access to cheap capital in the future. It encourages kids to be responsible, it encourages them to have ownership, but it allows them to have access to cheap capital to go do big things.
