The Side Effects of Creating Wealth: Affluenza.. A Potentially Fatal Disease

Why did you start reading The Rum Rebellion and/or subscribe to one of Port Phillip Publishing’s newsletters?

That’s a rhetorical question.

From surveys we’ve conducted we know, that in descending order, the majority are interested in…

  • Opportunities to create wealth.
  • How to protect wealth that’s already been created.
  • To be better informed about the economy and markets.
  • Seeking an independent opinion.

Personally, I fall into the wealth protection camp…for now

My strategy is to bunker down and wait for the pending debt crisis to unfold. When that eventuates, we’ll switch to wealth creation mode and look to potentially capitalise on depressed market conditions and buy assets at a deeply discounted level.

At this stage I think I know what you’re thinking ‘Yeah, so what? Heard that before’.

Bear with me.

Let’s say our plan works really well. We help you create a level of wealth you had not thought possible.

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Pick a biggish number, one that’s more than you ever considered you’d see on your portfolio statements.

Got that number? Good.

Does having the responsibility for this wealth make you nervous? Well it should…even if it’s just a little.

Achieving a level of wealth that’s beyond your dreams can be exciting but it also comes with responsibilities you may not have previously considered.

Here at Port Phillip Publishing our aim is to not only make you richer in financial terms but also richer in your relationship with wealth.

Money is a twin-edged sword.

For some it can make a life and for others it can break a life.

For some it can lead to a life of opportunity and for others it’s proven to be an unbearable burden.

Investing in your knowledge on markets and the economy is only one dimension. But nothing in life is ever one dimensional.

There are always consequences…intended and unintended.

One of the potential side effects of wealth is affluenza.

Understanding the importance of developing an immunity to affluenza is crucial to the long-term retention of your wealth…and your family.

In anticipation of our advice significantly increasing your wealth in the coming years and decade/s, here’s how to recognise affluenza and some tips on how to avoid it.

While this is primarily aimed at those with children, the lessons are applicable to anyone who’s interested in having a healthy relationship with money.

What’s Affluenza you ask?

…a psychological malaise supposedly affecting wealthy young people, symptoms of which include a lack of motivation, feelings of guilt, and a sense of isolation.’

Affluenza first came into existence in the book The Golden Ghetto: The Psychology of Affluence, written by psychotherapist Jessie H O’Neill in 1996.

This wasn’t a book written by another academic based on theory and controlled experiments.

Jessie O’Neill is the granddaughter of Charles Erwin Wilson…past president of General Motors and also President Eisenhower’s Secretary of Defense.

In Jessie O’Neill’s words: ‘my grandfather was quite a wealthy man…my mother was one of his six children. When my mother died, I was 28, and I inherited about $3 million. The first thing I did was go out and buy an ounce of cocaine.’

In her personal experience, inheriting wealth can be a very hollow achievement for many people. You have to find meaning in what you do…which in her case has been building a professional practice based on understanding and treating the problems that can come with great wealth.

In her opinion, affluenza can be described ‘as a dysfunctional or harmful relationship with money and wealth or its pursuit.

Just how dysfunctional and harmful could that relationship become (emphasis is mine)?

Vorayuth Yoovidhya is the heir to a massive fortune amassed by his father, who owns the energy drink company Red Bull. At an estimated $12.5 billion, they are the fourth-wealthiest family in all of Thailand. In 2012, Yoovidhya was speeding in his Ferrari when he ran over a police officer who was on a motorcycle. Yoovidhya didn’t even try to stop the car. He sped off, leaving behind the wreckage and the dead man in a heartless hit-and-run.

A sobriety test confirmed that Yoovidhya was, in fact, drinking and driving. His parents paid for his bail, and the family’s lawyers were incredibly skilled at delaying his day in court with a mountain of paperwork. This bought Yoovidhya enough time to disappear.

The police attempted to put out an order for his arrest, but they can’t find him, because he uses the family’s private jet to live in foreign countries. Yoovidhya isn’t exactly in hiding. He flaunts his luxurious lifestyle living in London, yet he has never been arrested.

I wish I could tell you that this is an isolated case of extreme affluenza…but it’s not.

There are plenty more examples of children who are afflicted — in varying degrees — with this ‘disease’.

The parents of these children have failed to recognise the ‘yin and yang’ of money…

the greater the wealth, the greater responsibilities.

The following extract is from the foreword of James Grubman’s book Strangers in Paradise: How Families Adapt to Wealth Across Generations (emphasis is mine)…

An astonishing fact is that the vast majority of the wealthy come from middle-class or working-class backgrounds. Born and raised in modest economic circumstances, they find themselves as adults in the wonderful but unfamiliar world of wealth, like immigrants to a new land. Their adjustment is often harder than they anticipate. Yet awaiting wealth’s newcomers is an even more daunting task: how to raise children and grandchildren successfully in the family’s new world of affluence.

Nothing ever happens in a vacuum.

There are always consequences for our actions.

Creating wealth solves some problems but also creates others…as many Lotto winners have found out the hard way.

Failure to understand the rules and culture of this new world of affluence, can and does have dire consequences.

The one question the wealth creators have either failed to ask or failed to answer, is…

‘how do we raise our children (to not only cope, but) to thrive in the new world we’ve created?’

Asking this question could/would have started a process to source out information on how to strike the right balance between affluence and appreciation.

There’s a lot of things money can buy, but it won’t ‘buy’ you out of the responsibility that comes with taking children into a world of affluence.

Paying off victims. Mobilising an army of high paid lawyers. Hush money. These are no substitutes for responsible parenting.

The only lessons learned from this sort of behavior are bad ones.

And it’s not just the uber-rich who are infected by affluenza. Remember Olympic swimmer Nick D’Arcy? In 2008, at the post-Olympic trials celebration, he broke the jaw and eye socket of fellow swimmer Simon Cowley.

After details of this particularly nasty incident were made public, the Sunshine Coast Daily revealed this wasn’t the first time D’Arcy had inflicted injuries on a fellow athlete (emphasis is mine)…

Swimming authorities are investigating allegations Nick D’Arcy bashed a fellow Sunshine Coast athlete during a drunken altercation outside a Mooloolaba night club 18 months ago.

The incident left Mooloolaba ironman Tim Peach’s face unrecognisable, forcing him to miss a week of training leading up to the Coolangatta Gold.

It is understood D’Arcy’s father Justin, a doctor, arranged for Peach’s medical treatment. He also paid him the wages he missed due to his injuries.

Covering up or cleaning up for your kids sends all the wrong messages.

Taking on the role of ‘fixer’ doesn’t make the underlying problem go away. The risk is the problems escalate to the point where they become newsworthy for all the wrong reasons.

In my youth, taking responsibility for your actions was summed up by the saying, ‘be a man and take your medicine’.

Failure to ‘take your medicine’, on a best-case scenario, could result in children becoming lazy, wasteful and spoilt.

Worst case, they can develop feelings of isolation, depression, drug addiction and/or become morally bankrupt.

This is not the legacy any self-respecting parent wants to intentionally leave behind.

But it does happen unintentionally.

Parents need to apply the same discipline they used in creating wealth, to their efforts in building their family’s immunity to affluenza.

But far too many don’t.

It’s somewhat bizarre when you think about.

Most people create wealth to build a better life for themselves and their family.

Yet, if the responsibilities that come with that wealth are neglected, then, what started out as a positive, ends up becoming a (major) negative.

Here’s some sage advice for parents of young children…

Just because you call the shots doesn’t mean you’re at the right end of the barrel.

Phil Simborg

Before you lock and load your advice and/or actions, make sure you’re aiming at the target you want to hit.

Believe me, there will come a point in the parent/child relationship where you no longer call the shots.

Your children will get to an age when they are old enough to include or exclude you from their world.

Be very careful of the ‘shots’ you fire in their younger years, because in your later years, they could end up being bullet holes in your feet.

If you want to raise productive, generous, independent, respectful and well-grounded children then make sure your words and actions are aimed at hitting this target.

Failure to do so runs the risk of our children catching affluenza…a potentially fatal disease.


Vern Gowdie,
Editor, The Rum Rebellion

PS: Greg Canavan recently caught up with US gold expert Jim Rickards to talk about the truth behind the recent rise of the gold price in Australia. Click here to watch.

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion