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Passing the Baton
Sunday 13, May 2018

Passing the Baton


Many of us aspire to acquire wealth for various reasons which include security, making ourselves happy and or passing it on to the next generation.  I would like to focus on those of you who have or are building wealth with the next generation in mind.  That is a very noble pursuit as we all know that when we die, we can’t take it with us.  This is the reason that some persons don’t care and prefer to spend it all now, deliberately excluding the next generation from getting anything.

People’s greatest fear when they acquire wealth, is losing it.  There are people who lose sleep when they have no money to pay their bills, but the opposite is also true.  Many people constantly watch and lose sleep over their investments, worried about the possibility of loss.  This article is not dealing with loss though; it is really about preserving wealth.

It is important to consult with professionals when your portfolio is large enough; this is to ensure that your loved ones can access the assets in the most cost-efficient way.  There are investors  who create companies and then  allocate the shares  rather than putting it in their name.  These things are usually done with the advice of an attorney-at-law and a good accountant.

Investment professionals are essential when thinking long-term about growth and of course preservation of capital.  I have spoken to many business people who have advised me that they take on enough risk in their day to day operations and would prefer to keep their investments in safe instruments-even if it means earning less on their portfolio.  There is nothing wrong with that as preserving capital is the very first rule of investing, growth would come third.  I believe Warren Buffett said that the second rule is to remember the first rule!

It is all well and good for you to create wealth, and preserve it, but if your children know nothing about either your family business or investments, you can rest assured that the money will evaporate.  It is good to teach children from very early about money, and how it works.  Losing and gaining early in my investment life taught me some invaluable lessons.  Children can take the risks when they are young
(but of course not with your money)!  Giving children too much money is a mistake, in my university days abroad, the foreign students had so much money, that they would buy drinks for everyone at the bars and use the rest on drugs.   However, giving your children no money is also a mistake, because they never learn how to handle it, or invest it, or get used to dealing with financial institutions. 

In this age of technological advances, it is very easy to live far longer than you planned.   This means that you could outlive your money, if it is not managed wisely.  In addition, while you may feel that you have more than enough for your needs and wants, this is not the time to go overboard, by giving your heirs their money ahead of time, mortgaging your home, giving them your retirement money or misplaced generosity.  As my professor used to say, you cannot borrow for retirement.

In summary, the process of creating and preserving wealth, has to be followed with astute management with the advice of professionals, and lastly, your children need to be educated about managing investments so that they don’t wander down the path of the “prodigal son” in the Bible who wasted his inheritance and had to come running back home.  There is still no guarantee after you’ve done these things that your money will be preserved, but at least it is just money!  Happy investing!

Yanique Leiba-Ebanks, CFA, FRM is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at Feedback:  If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at:





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