Search the phrase “sudden wealth syndrome” in Google and you'll find thousands of Web pages replete with tales of lottery winners, women who married wealthy men, and successful entrepreneurs who all have one thing in common:
They can't handle their new riches.
It's almost become a truism that those who find themselves with a sudden windfall will blow it. In fact, the chance that a wealthy family will still be wealthy three generations down the line is less than one in 10. Experts who deal with such families say it's true that the chips are stacked against them.
“Yesterday's wealth is no guarantee of tomorrow's success,” said Sarah Bull, a principal and member of the KJH Private Services team at KJ Harrison & Partners Inc. in Toronto. “When people receive wealth for the first time they don't really know how to handle it. There are often emotional issues around handling it, and they don't know how to spend responsibly, and they don't understand the math.”
A growing body of evidence points to disturbingly low levels of financial literacy among Canadians, and one of the symptoms is the spending habits of the nouveau riche. A study released this month by research firm TNS found that only 13 per cent of Canadians could answer three basic risk-literacy questions correctly, and suggested that most consumers have very little grasp of the basic principles of financial risk.
It asked participants to assess the relative payout of two lotteries; the relative risk and returns from two investment funds; and the relative risk of investing in a single stock versus a basket of stocks. Sixteen per cent of Canadian men and 9 per cent of women answered all of the questions correctly. Those who had attended university fared better than those who hadn't, but both groups had dismal results.Read more
Jacoline Loewen, finance expert, Author of Money Magnet: Attracting Investors to Your Business.
1 comment:
Real traders are taught that the Holy Grail to Investing doesn't exist. Real people were taught that all the planet's move about the earth, don't go to far out into the ocean(you'll fall off the earth), on and on..........
When one looks outside the box(inventor), goes against the group(thinks for self), said they found(developed) something that is supposed to be impossible(airplanes), they were once killed. Now these people are called bad names and delegated to be unheard, and ignored group.
I developed multiple arbitrages that enable me to trade(not invest) in the finacial markets, without risk(The Holy Grail to Investing), or arbitrage that anyone can do. Over 30% a year.
Thomas Adair
thomasadair@live.com
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