If you’re like many Americans, you’re working hard to make a good living and provide all the perks of life to your children and family members. On the surface, this seems to make sense. Obviously, we all want  to take care of the ones we love, but if we really think about it, how much are we really helping them?

One recent study by T. Rowe Price found that 46% of parents have gone into debt to cover children’s expenses and 57% say they spend too much on things their children don’t need. In fact, it’s not uncommon for many wealthy families to have their fortunes entirely squandered by the 3rd generation. That means that your grandchildren will be back in the rat race after all the hard work you put in to secure your family’s estate for generations.

So what goes wrong and how do we learn from the mistakes that these families made?

The Subtle Lie

For many Americans, the goal is to work hard, make and invest money, and provide support and luxuries to their loved ones. To continue providing support to their children even after they are gone, many aim to leave behind a large estate so that their children won’t need to worry about finances in the future.

However, this plan can backfire if their children are never taught how to properly preserve their inherited wealth. Often, children who are raised in the lap of luxury grow up to only be spenders of the wealth that they inherit. These children also pass this bad habit on to their children who replicate it again and again until the family fortune is lost in a fraction of the time it took to earn. Although this may seem shocking, it is common among many wealthy families — so much so that only a few families have gotten it right.

Changing the Way You View Your Estate

Conventional planning has focused on preparing the assets for the heirs when in fact the goal should be to prepare the heirs for the assets. A recent survey of parents showed that only 44 percent take advantage of the opportunity to discuss financial topics with their children most of the time. Another survey showed that 71 percent of parents said they were at least somewhat reluctant to discuss financial matters. So If this sounds like you, you are not alone.

The fact is that kids want to learn about managing money, and they really do listen to their parents when they teach them about it. Over the long run, it’s much more important to teach your child about the value of a dollar, the benefits of hard work, and how to manage budgets than it is to leave them with a large estate. The T. Rowe Price study found that children who discussed finance with their parents at least twice a month were smarter about their own finances than those who did not.

In addition to teaching children about investing and budgeting, it’s a great idea to teach them about debt, banking, and how real estate and loans work. Don’t be afraid to also share your financial mistakes and failures with them as a teaching point. They will listen, learn and hopefully not repeat the same mistakes again.Your financial Advisor may also be a good resource for them.  For example, here at FMB Wealth Management, we have our Generational Planning Program to assist our clients in the area.

As adults looking in the rear view mirror, most of us can only dream of having these skills taught to us by our parents. If you are one of the few parents who commit to doing this, not only will you be building a closer relationship with your kids, but you’ll also increase the odds that all of your hard work and savings isn’t in vain. Families that take time to teach their children these skills, and make sure that these skills continue to be passed down, have a very high success rate with holding on to generational wealth and even continue to grow the family fortune.

To fully comprehend the nature of yoga and advance meaningfully on the road to Self-Realization for which it was developed, one should become acquainted with, and adhere to, the Eight-fold or Eight-Limbed Path of Yoga expounded by Patanjali in his work, the Yoga Sutras. This masterful series of aphorisms or ‘wisdom nuggets’ are timeless directives for all who seek God scientifically – vs. blindly – regardless of faith affiliation. Not philosophic musings solely relegated to Hinduism, they codify universal principles that guide seekers of Awakening with precise esoteric rationale.

In this post I provide brief explanations for the first ’Limb” of Patanjali’s Eight-Fold path known as Yama. Referring to control or moral conduct, Yama implies exercising restraint of thought and deed through intentional self-regulation to achieve harmony with the innate virtue of the soul. Not artificial rules imposed for societal order, they are injunctions to manifest divine qualities dormant in all. Just as an orchard will provide nourishment to the body when its harvest ripens, so too will the qualities of Self-Control give rise to distinct fruits, or soul powers, when perfected. This is the reason why such principles can be said to be universal; they offer proof of their being regardless of culture or creed.

The Yamas consist of 5 directives: Non-Violence, Non-Lying, Non-Stealing, Non-Sensuality (or continence), and Non-Covetousness (Non-Greed). Each is triune in nature with corresponding Dominant, Subtle, and Perfected aspects. Being exceedingly intricate matters, a treatise could be written about each element yet, for our purposes, a basic overview must suffice. The following rendering should provide readers an easily understood view of each Yama and its related aspects.

Ahimsa or Non-Violence
Dominant: To never harm any living thing, physically, emotionally, or mentally.
Subtle: To overcome all tendencies to even wish harm in any way.
Perfected: All creatures become rendered harmless in one’s presence.

Satya or Non-Deceit
Dominant: Always be truthful; never falsify or even intend to deceive.
Subtle: Accept things as they actually are; exercise complete self-honesty; adhere to Truth as reality.
Perfected: Whatever one says will come true.

Ashteya or Non-Stealing
Dominant: Don’t take what is not yours be it material or immaterial (love, reputation, etc.).
Subtle: Never desire what is not yours. Recognize that everything is part of your universal Self.
Perfected: Whatever is needed will come when it is needed.

Brahmacharya or Non-Sensuality
Dominant: Do not overindulge in any sensory activity or pleasure.
Subtle: Control energy and govern the senses to develop refined awareness of the indwelling Divine.
Perfected: Enhanced mental clarity, physical strength, health, & spiritual magnetism.

Aparigraha or Non-Greed
Dominant: Release all attachments, even to one’s rightful possessions.
Subtle: Withdraw attachment to one’s own body and ego-personality traits.
Perfected: Capacity to recall prior incarnations.

To reiterate, the value in perfecting each Yama – subtle principles evident in all genuine spiritual traditions – is to bring forth latent soul qualities. Restlessness, attachment, desire, anger, lust, etc. keep the incarnate divine essence body bound and blind to its true nature. By removing such delusions and tendencies associated with them, we cannot help but manifest the ever-perfect attributes of the indwelling Spirit. And why is that important? Because the purpose of yoga and all spiritual endeavor is to shred the lie of separation-from-the-Divine, to foster spiritual awakening and, accordingly, reveal the truth which sets all free; ‘ye too are Gods.’

As a savvy investor, you probably already know that diversification is key to having a balanced, secure and low-risk financial portfolio. By dividing your assets among a variety of asset classes, industries, geographic regions, and stock types, you are minimizing harmful downside risk that may only affect a single industry or region, thus preserving your hard-earned wealth as a whole.

Too often, however, retail investors and professional advisors alike design portfolios that may look diverse on the surface, but are, in fact, far from it. This false diversification can be rooted in a number of erroneous — or downright manipulative – actions or schools of thought. Some advisors build portfolios that are so complex that it dupes investors into believing that their portfolio is diverse. In other cases, an individual’s portfolio consists of a variety of mutual fund company names; however, the underlying assets behind these names are anything but varied.

Here are a few reasons why your portfolio may not be as diverse as you think:

Name Diversification: An Illusion of Safety

When you take a look at your financial statement, you will likely see a list of fund companies. The more fund companies listed, the more diverse your portfolio, right? Wrong. True diversification depends much more on the allocation of the underlying stocks and bonds in your portfolio, not the managers who purchase them on your behalf. Having your assets invested with a single fund company doesn’t necessarily mean that your portfolio is at risk. Likewise, having your portfolio divided among dozens of different fund companies doesn’t necessarily make it diverse.

Complex Portfolios: More is Not Merrier

Investors, beware of portfolios or investment schemes that seem overly complex. Investing should not be all that complicated. In fact, the more complex your portfolio, the harder your true diversification is to track, which may cause you to unknowingly tip the scale in one direction or another. While diversification does require that you balance some different funds, there is no reason for portfolios to hold 15, 20 or 30 different funds, especially if they are from many different fund families. Not only do you complicate things and lose sight of the overall investment strategy, but you may are also be paying more in fund fees for this increased risk. Owning a multitude of individual stocks or mutual funds is not the answer to a stronger, more diverse portfolio.

To determine if your portfolio suffers from false diversification, work with your investment advisor to document the ideal characteristics of your overall portfolio as they relate to your savings goals, then take a deeper look into the allocation of your asset classes, stock types and geographic variety. Is your vision and reality aligned? If not, perhaps re-allocation or simplification of your portfolio is in order. It is also important to make sure you are paying the lowest prices possible to ensure your earnings aren’t eaten away by high fund management fees.

Investing shouldn’t be overly complicated or contingent on the day-to-day moves of individual fund managers. Not only can this cause more undue stress than necessary, but the added risk you take on by falling for false diversification can put a lifetime of hard-earned savings at risk. To get a second opinion on your portfolio’s diversification, contact FMB Wealth Management and we would be happy to complete a portfolio diversification audit for you.