Pater Familias is Latin for “father of the family or eldest male in a family or owner of the family estate”. This past week having just turned 60 I am reminded of my role as head of my little family. My own father, partner and friend died a little over 6 years ago but somehow turning 60 has reminded me of the responsibility I have for my family as well as my extended family. As my regular readers know I just returned from Tartas France a couple of months ago where I traced my family back 9 generations. For some reason the older I get the more important family history becomes. A lot of responsibility goes with the being the pater familias.
In the award wining series, Downton Abby, the pater familias of that family, Lord Grantham, loses a great deal of money on a single investment and is horrified that he will be the one to lose the family estate and bring shame to generations that came before him. The oldest family business in the world was Kongo Gumi in Japan. They built and repaired temples since 578 and went bankrupt in 2006 after 1428 years of continuous operation due to excess debt. While I do not know the details of the bankruptcy I would have not have wanted to be the pater familias at the time of that bankruptcy – especially in a society that so greatly values family honor.
The older I get the more I realize that property rights are important to the existence of a free society, but philosophically, no one truly owns anything. They are just caretakers until the next generation can take over. Their job is to pass it along in good condition or at least better than when they took over.
As the pater familias you have certain obligations. You need to first and foremost take care of the family itself. Nothing is more important. The true wealth of the family is the family itself. Your job is to educate, teach and instill a work ethic, teach proper morals and a sense of belonging to something bigger than oneself. Family stories, both serious and silly, are important. The family history both recent and ancient should be told. In Christian tradition the pater familias is the spiritual head of the household as well and must set a good example in worship and especially in everyday dealings with others.
As head of the family there are financial responsibilities to tend to. Life insurance is usually purchased to insure financial security in the event of an untimely death. Fire and casualty insurance is purchased to guard against sudden unexpected loss. Financial security is on the shoulders of the pater familias.
Thomas Stanley wrote the wonderful book “The Millionaire Next Door” several decades ago. He clearly stated that pretty much the only way to financial wealth (short of marriage or inheritance) is to simply spend less than you make and save the difference over a long period of time. There are no shortcuts here in spite of the fact that everyone wants to win the lottery and obtain wealth through luck. The lottery is a very poor plan for financial security. A budget and careful savings over a long period of time are the surest way to wealth and security that exists. It is not a certainty that you will obtain wealth but staying out of needless debt and paying off necessary debt as soon as possible are sure ways to financial security.
After you have managed to save your little family nest egg or have been fortunate enough to have some passed down you are now charged with holding onto it. My father used to say that making money is hard, saving money is harder but holding onto it is the most difficult of all. Never trust an investment advisor to handle your financial affairs completely. My favorite line is from a Woody Allen movie where he explains his job as a financial advisor, “I manage other peoples money until it is all gone”. Educate yourself and take council from wise advisors but realize that you and you alone are responsible for the investment decisions for your family.
Learn about asset allocation and investment. There are no shortcuts here. You just simply must spend the time to read and talk to wise advisors if you wish to provide not only for yourself in retirement but to take care of your family and to pass on the family estate to your heirs.
Asset allocation is about income generation and mitigating risk. Solid diversified investments in commercial real estate, blue chip stocks, bonds and family businesses are the place for the bulk of your wealth to produce income. A small portion (3 to 5%) should be spent on long shot investments with the possibility of large returns. Life insurance, fire and casualty insurance as well as wealth insurance (gold and silver) are vital to protect against unknown risks that can affect your family. Always keep at least 10% cash to take advantage of bargains in a downturn and at least a 10% precious metals position as the core base of your family wealth. The small return that you give up for the 20% not being actively invested will make sure that you will sleep well as pater familias.
Remember that those you love are depending on you now – invest wisely.
Larry LaBorde sells precious metals through Silver Trading Company LLC. Since 2001, Silver Trading Company has offered high volume sales of gold, silver, platinum and palladium to serious investors around the world. It also offers guidance about storage options for metals. Please visit Silver Trading Company’s website at www.SilverTrading.net.
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