So you think it's easy staying super wealthy?Here's a startling star·tle v. star·tled, star·tling, star·tles v.tr. 1. To cause to make a quick involuntary movement or start. 2. To alarm, frighten, or surprise suddenly. See Synonyms at frighten. statistic statistic, n a value or number that describes a series of quantitative observations or measures; a value calculated from a sample. statistic a numerical value calculated from a number of observations in order to summarize them. about wealth: Only 13 percent of the Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes 400 list in 1982 remained on the list more than two decades later, in 2004. That's because the biggest challenge for the uber-wealthy is staying rich. Contrary to popular belief, many wealthy people actually lose a great deal of money during their lifetimes. Not surprisingly, excessive spending appears to be the chief culprit. A study by J.P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Private Bank found that of the 255 people who kept their spots on the Forbes 400 list for over two decades, an overwhelming majority--205--saw their wealth decline during the 22-year period from 1982 to 2004. That period corresponds with a dramatic 13-fold run-up run-up or run·up n. An often sudden increase: a run-up in interest rates; a run-up in food prices; a run-up in house values. Noun 1. in the stock market. More often than not, wealthy individuals tend to spend too much and often eat into their assets. Others get waylaid by taking on too much debt or excessive risks. Many families have their wealth concentrated in one specific area--a private company, real estate, or an art collection--that can end in financial catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). if the sector suffers a downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. . Taxes pose a particularly tough problem for the wealthy, primarily because taxes on the transfer of an estate from one generation to the next can be as high as 48 percent. The bottom line is that even those in the upper echelon of wealth must take on some risks to stay in the upper echelon. Off the Forbes 400 50 names still on list after 22 years. 13% 205 names dropped off. Wealth did not grow fast enough or eroded because of: * over-concentration * over-leveraging * over-spending * taxation * family discord * liability suits 51% 145 names dropped off because of death, shifting assets. 36% Note: Table made from pie chart. Source: JPMorgan Private Bank, with data from Forbes 400 annual editions from September of 1982, through October of 2004 |
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