That 1 million is $40k a year, which is enough to live. Especially when part of that 10m is a house which costs very little to maintain (compared with rent). Crucially it's a great safety blanket too, you don't have to work 2 full time minimum wage jobs to afford to live, which increases the chance of getting a good job to top up that wealth.
This doesn’t happen. People with $10 million net worth aren’t living on $40K per year.
Expensive houses aren’t cheap to maintain or furnish or keep upgraded.
> Crucially it's a great safety blanket too, you don't have to work 2 full time minimum wage jobs to afford to live,
Why is this a comparison? Minimum wage jobs are actually extremely rare right now, but it doesn’t make sense that a family with $10m net worth would even have minimum wage no-skill jobs on their radar.
I think you’re looking at this from an extreme early retirement (FIRE) scenario for the entire family, but that’s not how people do this at all. Even wealthy kids get (expensive) educations and go on to have productive careers. Wealthy families aren’t just opting out of society and FIREing with $40k of spending per year.
There is $400k/year to spend per year.
Of course you could decide "I have 10m, I'm going to spend it". Thats your choice.
With 10% growth and 2-3 kids you can pass that on indefinitely to all your children even if all you do is a typical middle class office job.
Gen 1: 3
Gen 2: 3 + 9
Gen 3: 3 + 9 + 27
Gen 4: 3 + 9 + 27 + 81
Assuming the Gen 1 lives to 100 and each Gen has 3 kids every 25 years, then at the end you have 120 mouths to feed.
100 years of 4% growth above inflation would be rough 50x so 500M. But that assumes no consumption over the 100 years. Either way the growth of people overcomes the growth of resources over time.
And, yes, it's quite easy for the wealthy to get investments that return 7% - 8% with low to modest risk of loss. It's much harder to get more than that, but it's not difficult to generate substantial returns from even a modest portfolio in the low 7-figure range.
25 years per generation.
Year 0: 10m Year 25: 33.8m. 3 kids, give them 10m each, leaving you with 3.8m for the rest of time
This repeats as long as you want.
Over 100 years at 5% you have 1.315 billion over 120 people, which is 10.95m each.
At 4% you'd have to have a 29 year generation, which is certainly more realistic (I know very few people who had the first kid under the age of 30). And would everyone have 3 kids? Don't forget to account for kids who die before they reproduce too.
The other thing is people don't inherit when they are 20, rather when they are 50 or older. Children of well off families do get a leg up, first because they can afford to take more risk, have better access to education, also because of what they learn from their parents. But inheritance is typically something that come much after they key years of one's career.
The is obviously not easy, while it's extremely easy to blow through money.