Times of economic uncertainty often lead to panic within financial markets across the globe. Yet for a small percentage of the population uncertain times have little to no impact on business as usual, in fact some expanded their wealth. Investing principles gleaned from Biblical lessons played the greatest role in the creation of generational wealth. One name that echoes through modern history is a shining example of those principles being executed to perfection. From his humble beginnings born in a Frankfurt ghetto Mayer Amschel Rothschild became the “founding father of international finance” and one of the twenty most influential businessmen of all time. Mayer’s father was a money changer who worked for the Prince of Hesse, maybe that’s where his proclivity for finance got its start. Perhaps Mayer Amschel Rothschild was born in the Frankfurt ghetto to a money changer who worked for the Prince of Hesse, a region of modern-day Germany.
Taking a look back at the strategies used to amass one of the greatest fortunes the world has ever seen we find one simple timeless strategy stands out, Diversification. Unlike his father, by the time Mayer died, he had moved his family’s fortunes far beyond the borders of one small region, and the limitations and whims of one patron.
And you can do something very similar to what he did to create an immensely lucrative and secure source of profits in a time of great uncertainty. While our economic climate is concerning, Germany, and virtually all of Europe for that matter, was a chaotic and violent place during the lives of Mayer and his father.
A very extensive and convoluted system of intermarriage barely kept sovereigns in check in good times, and regional strife was the norm. The French Revolution was right around the corner. Only several years later, the Napoleonic Wars would rage for 12 years with two short breaks across the entire continent. The Holy Roman Empire was in its last days, finally dissolving in 1806. Yet through all of this, Mayer Rothschild and his five sons didn’t just survive as second-class citizens. They thrived.
While their predecessors often lost their wealth through violence or expropriation, the new kind of international bank created by the Rothschilds inoculated them from the greed and whims of others.
Changes made by the Rothschilds allowed them to insulate their property. The key innovation Mayer established was a level of interconnection and diversification that was unheard of at the time. Rothschild sent his five sons to five cities. Amschel to Frankfurt, Salomon to Vienna, Nathan to London, Calmann to Naples, and Jakob to Paris. And because of it, even through all the wars and upheaval of the next two centuries, the diversification allowed any one branch of the family business to be propped up by the others.
The first step to diversifying your portfolio to insulate you from the daily ups and downs of the market is to book a call with our Passive Investment Division to learn how our 40-40-20 investment strategy can help provide a hedge against market cycles & build long term wealth. Call us today at 877-452-6569 x103
