Generational wealth is the assets that you are able to leave to your children or grandchildren. This can be in the form of physical assets, a business, cash, an investment fund, stocks, bonds, or other types of securities. Most people aim to leave as much generational wealth to their heirs as possible. There are several strategies and tactics you can consider employing to help you build generational wealth for your intended beneficiaries.
Real estate
One of the most common ways people build generational wealth is through investing in real estate. Of course, purchasing real estate for you to live in will allow you to save money on paying rent in the long run which means more money that can be left to your intended heirs. On the other hand, you can also buy real estate for investment purposes in order to earn capital gains and receive rental payments from tenants.
Life insurance
Since you can never tell what will happen in the future, you may want to consider purchasing life insurance. In the case of you passing away suddenly and unexpectedly the life insurance policy will pay out benefits to your children and grandchildren.
Invest for retirement
At some point in your life, you will be forced to stop working and go into retirement. This means you will no longer be earning income from a job. You will want to prepare for this by investing strategically in order to ensure you have the resources you need to pay for your daily living expenses.
Failure to do this could end in your estate being diminished. It could also mean that your children or grandchildren will have to financially support you. Either way the generational wealth you leave to your heirs will be depleted as a result.
Invest in education for your heirs
Education is the key for many people to find a rewarding and lucrative career. However, the problem with this is that the cost of higher education can be quite overwhelming which usually leaves people in debt for many years or even the rest of their lives. For your children or grandchildren this can quickly diminish the generational wealth you leave behind. Therefore, it may be a good idea to invest and save for the future education needs of your heirs.
Teach your heirs about finances
Once you leave your assets to your children or grandchildren you will not be able to control how they manage their inheritance. Therefore, while you are still around you should try to educate your heirs about basic personal finance. Knowledge about budgeting, investing, and saving can be invaluable in preserving generational wealth.
Craft a comprehensive estate plan
Good family financial planning requires a carefully crafted estate plan that fits your own circumstances and personal goals of passing on generational wealth. The intricacies of choosing the best estate planning strategy requires knowledge in finance, taxation and more. It may be in your best interest to consult with a wealth management advisor who can help you choose the best way to build generational wealth for your children and grandchildren.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.