Generational wealth. You may have heard the term and wondered what it means. Hard-working individuals and couples build their finances in various ways to pass them down to their children. This is a way to care for the next generation, but it is much more than a monetary gift or an inheritance. This is a lasting vehicle to maintain prosperity down your family line.
Are you looking to the future and wanting to provide an easier life for your family when you are no longer here? Easier said than done, but with some sound advice and strategic maneuvers, you can build a bounty that will take care of your descendants.
Here is how to build generational wealth.
1. Discipline
There is no secret to building generational wealth. It is the easiest and the hardest thing to do. At its core, it takes discipline and patience in several key investment areas that historically generate the most money. This doesn’t mean there are no other avenues because there are many ways to build up finances.
Ultimately, it is acquiring assets and building up cash you don’t need in retirement. By generating an overflow that can be earmarked for your family, you provide a legacy that can be passed down the line to your children and beyond. Besides the investments and cash, you also want to provide the wisdom to manage it and make it grow.
2. Financial Planner
Not everyone is an expert at generating wealth, so it is important to get the advice and guidance of a professional to keep you on track for your financial goals.
Building a relationship with a financial planner is important. It will help them direct you to the best investments based on your monetary commitments and willingness to take some risk when necessary. The sooner you start with a financial planner, the better. Money invested with intention over time is the best recipe for wealth management. You can optimize income streams that will benefit your family through multiple generations.
Commit to building generational wealth and then follow these steps to success. You can lean on your financial advisor to assist in your journey, and then you can provide for those you cherish the most; your family.
3. Investing
Without a top executive position at a Fortune 500 company, saving enough money for a lasting legacy will be tough. The cost of living is high, but if you are frugal and budget conscious, you can put aside monthly money. However, this is not forgiving to the next generation and is for investing. It is through investing that real money can be accumulated over time, and these methods best do it.
4. Stock Market
The stock market is where shares of publicly traded companies are traded. This is a place to put your money into, and it has the potential to be very lucrative. These are the main types of investments:
Stocks
This is an investment with a specific company where you buy a small piece of their earnings and assets, You can purchase these individually, but they come with more risk than other investments. Some stocks will also pay you dividends.
Bonds
A bond is a loan to a company or the government, and you allow them to borrow your money in exchange for interest and the principal. This interest is typically paid once or twice a year, with the principal returned at the bond’s maturity date.
Exchange Traded Funds
ETFs are a type of index fund that are cheaper than mutual funds and trade like a stock. They are a group of passively managed stocks that track the market index, giving you instant diversity and less risk.
Options
Options are a contract to buy or sell a stock at a specific price on a specific date. You are buying an option to act on the stock rather than buying the stock itself and can make the trades, sell the option or let it expire.
5. Real Estate
Buying, selling and accumulating real estate is one of the best ways to accumulate wealth, and you can pass these assets down to your family. Timing is always the key, but you can buy and hold in many markets as property values increase.
Make money in real estate by:
- Flipping
- Having commercial and residential rentals
- Buying land
- Buying vacation properties
This tangible asset can provide income, equity, and property for a family.
6. Entrepreneurship
Self-employment is a lofty goal because you are working for yourself, and this type of business can be scalable and provide income for your family down the road. A family business is a great way to bring your children into the company and learn how to run it effectively so they are successful after you leave it. They may even take what you have done and expand it or sell it to reap the profits.
