Last year, I went to see the movie “All The Money In The World” when it was in the theaters. It’s the true story of the kidnapping of J. Paul Getty’s grandson. At the time of the kidnapping, Getty was one of the richest men in the world.
His grandson was kidnapped as a way to extract money from Getty. The kidnappers wanted $17 million. Getty wouldn’t pay. Finally, after 3 months, the kidnappers cut off his grandson’s ear. Getty decided to pay, but negotiated the amount down to $2.2 million.
The grandson was finally released, but lived a horrible life going forward. Due to a drug overdose, he had a stroke in his 30s that left him paralyzed, partially blind and unable to speak. He actually died in his early 50s. I couldn’t imagine the mental trauma he experienced throughout his kidnapping, and how his grandfather, who could easily afford $17 million, wouldn’t pay. He had to feel as if his life didn’t have much value.
Heartbreaking.
I left the movie thinking that Getty was a complete ass. I’ve since spent some time studying him, and have come to the same conclusion… he was a complete disaster when it came to people. In fact, I read the book titled “Painfully Rich: The Outrageous Fortune and Misfortunes of the Heirs of J. Paul Getty,” and found the following:
“The great unanswered mystery of the Getty fortune is why it has apparently devoured so many of its beneficiaries. Why should this massive reservoir of wealth have proved to be not just the largest but probably the most destructive major fortune of our time?
And why, when millions die for want of money, and countless millions slave, scheme, murder, labor, subjugate themselves for such pathetic glimpses of the stuff, should something as pleasurable as money bring such misery and havoc as it has to Getty’s heirs?”
Consider the following:
- One of Getty’s sons committed suicide before Getty’s
death. - At the time of this suicide, another son was about to
die from an alcohol and heroin addiction. - A third son, disinherited at birth, had grown
increasingly embittered at the way his father had
treated him. He ended up making very risky
investments trying to win Getty’s approval and lost all
of his money
The only son that seemed to be okay, and was actually doing well, actually had cut himself off from his father and Getty Oil. This doesn’t even consider all of the problems of his grandchildren, or the legal battles the family had with each other over money.
Needless to say, there is a lot for us to learn from Getty.
We can, and should, study his wealth building strategy extracting nuggets for ourselves. We can, and should, study the mistakes he made with people including his parents, his various wives, all of his children and his grandchildren.
He is a virtual road map of what to do for wealth accumulation and what NOT do with people.
It seems as if Getty was driven to accumulate massive wealth because he was snubbed by his father’s will.
Getty’s father was not happy with how he was living. He had been married several times and treated his wives horribly. He had many children, but didn’t spend any time with them, or even seem to care about them. His father was so unhappy with his only child’s behavior that he didn’t leave him any of his wealth. Instead, he gave all of his money, and controlling interest in his business to Getty’s deaf mother.
This had a big impact on Getty, and it seems as if he spent the rest of his life trying to prove his worth to his dead father. In Getty’s eyes, the only way he could prove his worth was accumulate more money than his father. He became obsessed with money.
Instead of repeating his Getty’s story in detail, I’m simply going to list various lessons I extracted from his life.
We’ll start with what we should consider copying:
After Getty’s father died, he got serious about wealth accumulation. He set TWO rules for himself, and he followed these two rules with extreme discipline:
Rule One: Do nothing to negatively impact your balance sheet(s). This meant, he couldn’t spend money frivolously. He didn’t buy massive homes, and he didn’t host large expensive parties simply to impress others. He would only spend money on things that improved his balance sheet. This meant he only purchased things that would increase in value over time. Every dollar spent was actually a long-term investment. His massive art collection is a great example of this rule in action.
Rule Two: No deflection, or distraction from the financial game he was playing. In other words, Getty’s ONE THING was wealth accumulation. He would not allow himself to be distracted by anything other than this ONE mission.
I’ve suggested something similar with our 3-Step Cashflownaire Plan. Focus on ONE step at a time. Do not allow yourself to become distracted. Stay the course!
Another valuable lesson we can take from Getty is that he didn’t care about what anyone thought. He lived exactly how he wanted. He didn’t compromise to please others. He didn’t settle. He also didn’t do anything he didn’t want to do.
Although I personally don’t agree with many of his life choices, I certainly respect his ability to walk his own path. He lived 24/7 in the glorious Position of F-You.
The truth is that Getty was a master of lifestyle design. Instead of working in his businesses, he traveled the world managing operations over the phone. He was actually referred to as the “Vagabond Billionaire of Europe.”
During his travels…
“He was compelled to live in good hotels during his periods abroad, but this was principally because only the good hotels had reliable telephone switchboards. He always made a point of bargaining for the cheapest suite available. He wasted nothing, ate economically, and recorded every expenditure.”
He created several “Toll Positions” where he was making money 24 hours a day, 7 days a week. His oil refineries were refining oil around the clock. His large tankers were delivering oil night and day. His oil wells were pumping wealth non-stop from the bottom of the ocean.
His basic investment strategy was to buy when everyone else was selling (When the odds were in his favor!) He would hold on to each investment until everyone else was buying. In fact, he purchased the Pierre Hotel, on the corner of Fifth Avenue facing Central Park in 1930 for $2.35 million. It cost $6 million to build. His only reason for buying it was because it was a bargain.
When the stock market crashed in 1929, he saw an opportunity to buy controlling interests in complementing oil companies. He took advantage of the low stock prices to buy businesses that would allow him to distribute Getty oil internationally.
His father’s approach was to lease land and then drill for oil. This was obviously a risky strategy because there was no guarantee of success. (The odds were not in his favor.) Getty realized he could simply buy controlling interest in other companies with successful oil operations at discounted pricing. This strategy provided better financial returns with a lot less risk.
One of the biggest ideas we might consider copying actually came from Getty’s mother. Mrs. Getty was afraid her son would completely abandon all of his children and grandchildren, so she established the Sarah Getty Trust.
She contributed several million dollars into this trust. She also made J. Paul Getty contribute to this trust, too. The trust became the main vehicle Getty used to pass wealth on to his family.
He could apply his obsession to investing the money in the trust without any negativity or guilt, as it was for the benefit of his heirs.
The trust had several key requirements. There may be the most important:
- The trust couldn’t borrow money. This way the
trust was protected against the possibility of
bankruptcy. - None of the money could be used personally by
J. Paul Getty. This provided maximum
compounding. - It was tax sheltered and grew tax-free.
These trust 3 requirements significantly reduced the flow of money out of the trust. This allowed more money to be invested. This also meant that of the profits from each investment were plowed back into the trust. This trust, which started with approximately $3.4 million, was valued at $4 billion after J. Paul Getty’s death.
This trust idea is swirling around in my head, and I think it’s something we should definitely be copying.
Now let’s move on to a few lessons on what not to do…starting with this from the book:
“Over the years, money had taken on various aspects for Getty: money as power, money to make money, and in a deeper sense, money to justify himself before his parents and his conscience. But there was never cash to be enjoyed as any normal person might have enjoyed it, by the simple act of spending. Because of this, it was as if Getty’s money cheated him; and since he made the fortune in his own image, this meant that he was finally cheated by himself…
In the past he had made himself an isolated figure in the interests of secrecy and strength – but now this isolation merely left him lonely.
His complete dedication to accumulating more and more wealth left him miserable. He actually was trapped in his operating philosophy. He couldn’t spend any money because this would be frivolous and against his two rules.This meant he spent his life building something he would never enjoy. To me, this makes zero sense. What a waste of life.
But it actually gets worse…
Getty obviously valued money over people. This is apparent in every single relationship he had, and it caused so much misery. He had multiple failed marriages. He had numerous children, and never spent any time with them. He went years without calling or seeing his kids. He didn’t go to their weddings. He simply abandoned them until he needed them in his business. These kids all struggled in their lives because of his abandonment. Most of them turned to alcohol and drugs to try and cope with his lack of love.
There is no requirement in life to get married and have children. Based on how he lived, it was very obvious he should never have married, and he shouldn’t have had children. However, he repeated this mistake over and over again causing more harm to more people. He actually got married for the second time before his first divorce was finalized.
“What he had left his family was something else: too much money, a tangle of troubles, and a legacy of broken lives.”
I actually think we should have fun making money, and we should also have fun spending money, too. We shouldn’t waste money trying to impress anyone, but we should use our money to really enjoy our lives. We should design our perfect lives and then get busy living it!
