In March, our family (Kyle's) traveled to south Florida for Madeline's cousin's wedding. After getting off the plane, we were starving. Having lived in West Palm Beach for the first four years of our marriage, we racked our brains for a nostalgic place to bring our kids for lunch. "THE BREAKERS!" we said simultaneously. If you aren't familiar with The Breakers, it's a fancy hotel on Palm Beach. However, it wasn't always a fancy hotel. It used to be someone's house.
My kids couldn't believe that a place so big could actually have been someone's home. They wanted to know all about this mysterious family rich enough to build this mansion. "How much money did they have?" "How did they make that much money?" They were curious. It turned out to be an excellent opportunity to discuss the lessons I had learned from the Vanderbilt family told by one of their descendants, Arthur Vanderbilt.
Cornelius Vanderbilt was the patriarch of the family and an industrial-era railroad tycoon. He once told his son, "Any fool can make a fortune; it takes a [person] of brains to hold onto it." As it turned out, the Vanderbilt family didn't have enough brains.
Charlie Munger is well known for popularizing the concept of inversion: Some problems are best addressed backward. Want to know how to prolong your life? Look at the primary causes of early death and avoid them. Want to know how to build wealth? Study examples of those who lost wealth and learn from their mistakes.
The Vanderbilt family went from being the wealthiest family on the planet to broke in three generations. Their legacy is an inverted lesson on building and maintaining wealth. If you want to lose wealth like the Vanderbilts, follow their example by sticking to these principles:
- Keep up with the Joneses
- Live beyond your means
- Take up gambling
- Cultivate an addiction
- Borrow as much money as you can
- Hold all your wealth in a single industry
Sometimes success is found in simply avoiding destructive behaviors.