When was the last time you checked the lists and lives of wealthy people? You are sure you want to be one of them, so it makes sense that you study how they think and operate, model them, and create wealth for yourself. Well, that’s not the main point of this blog. What we want to check today is what happens to wealthy people after they have passed away. Did you notice that some of them passed down their wealth to children, grandchildren, and the following generations?
On the other hand, some wealth did not last more than the first generation. Some even crumble and vanish at the hands of the children. Does this tell us anything? Let’s look at the statistics. Around seventy percent of wealth disappears in the second generation after the pioneer. Of course, if you are starting from scratch, you will know the importance of generational wealth. You can imagine how easier it’ll be if your parents had left something of wealth and financial guidance that you could count on.
Now it’s your turn. Will you leave your kids to the hand of destiny or prepare a financial future for them? You are probably nodding your head in agreement with the latter. If that’s your wish, it’s very well achievable and how you will do it is what you will learn in this blog. Avoid every distraction because this is a serious discussion.
Invest in real estate
Building wealth requires that you pass through three stages; making money, keeping it, and investing it. Now that you want your wealth to last generations, these foundations and structures have to be even more solid. Real estate alone can provide you with each of these three stages. It gives you the opportunity to preserve the value of your money as you invest. If you have ever heard the advice “don’t wait to buy real estate. Buy real estate and wait”,. That’s a truth you should hold and never forget. Real estate involves land and any other structures attached to it. Its value comes from a simple economic theory of demand and supply. There is a limited portion of land available on this planet, and the demand for it will continue to rise. The house, land, or rental properties you buy today will increase in value in the decades to come. Buy real estate now and pass it to the next generation. It’s a great way to create wealth that lives through generations, especially when we consider how it relates to our next point.
Create broad income streams
When creating multiple streams of passive and active income, it’s imperative that you know that this is not only for you. You should have in mind that your legacy lives after you’ve gone. There are many ways to create cash flow, and as mentioned earlier, real estate is one of them. It allows you to make extra income through rentals while you’re still holding it. The golden principle you need is never to sell these properties but only milk from their produce. Pass this principle to your kids and let them do the same for their kids. In a few decades, the family will have accumulated many properties that generate passive income. We bet you know what that means; the coming generation will no longer have to worry about putting food on their table and clearing the bills again. They can focus on things that will add more to the existing wealth.
Build a business that can survive through times
On the basis of life length, we can categorize businesses into two; evergreen and short-life businesses. There are some products that people will always continue to buy till the end of time. Food, furniture, land, and clothes are a few of the many examples that exist. Businesses around this kind of product are evergreen businesses. Louis Vuitton is a model for what we are saying. Created in the eighteenth century by Vuitton himself, this company has survived through father and son and is still leading its industry up till the twenty-first century. All they have to do is keep up the innovation, and the family becomes the business. Most other businesses only have the capacity to survive the present generation. By the next generation, they will be blown into the dust. If you want generational wealth and a legacy that lives forever, understanding evergreen business and how to build one is sure what you need.
Invest in S&P 500
Stocks used to be an active investment before. But now you can choose to stay passive or active, thanks to the standard and poor 500. S&P 500 is an index that combines the United States’ five hundred best-performing stocks in the market and allows you to invest in all of them simultaneously. The good part is that it’s constantly tracking the performance of those companies, shuffling and replacing when necessary. It’s so good that ten thousand dollars invested in 2010 will be around 80,000 dollars at the time of this blog. For anyone looking to build generational wealth, this is another passive investment you can look up to for a long-term purpose. Invest now, and let the wealth keep growing.
Invest in golds, silvers, and precious stones
As much as there are assets you should hold on to and create cash flow from, you can also buy some assets for the purpose of selling them in the future. If you’re already wealthy before you die, chances are you might not need to sell these assets again. Instead, you pass it on to your children, and they do the same. Our suggestion in this blog revolves around precious metals like gold, silvers, and others. They have an inherent value that you can trade for better prices sometimes in the future. The more of them in the family, the more the net worth. Should anyone need to raise some cash, they can easily liquidate these assets.
Borrow instead of selling your Cashflow assets
If you are very familiar with the nitty-gritty of building and keeping wealth, you will likely know what we are saying. Wealth is like a tree producing fruits for you. The more of those trees you have, the more your fruits. There comes this day when you need fuel for your cooking. Will you cut down the trees producing fruits? Of course, you won’t; except you don’t want more fruits anymore. Instead, you will go get your fuel elsewhere. The trees are your assets that generate passive income. It’s not wise enough to sell them because you need funding. Instead, you should leverage on using other people’s money by borrowing. That way, your cash flow assets will keep generating income while you pay back the money. It’s a very simple but little-known strategy imperative to anyone that wants to build everlasting wealth for themselves and the generations coming after them.
Invest in arts and other intangible assets
Before now, we have been emphasizing the importance of buying cash flow and value-driven assets. Our examples so far are tangible things with intrinsic value. Now it’s time to know that you can also buy assets that are valued only based on human perception of them. These are called intangible assets. We can give examples all day, but we’re not going to bother you with that show. We’ll just give you one intangible asset that survived the test of time, which is Art. Rich people buy art as an asset. They find it valuable for a reason known best to them. But most of the time, it’s driven by the pride of feeling special and unique. You know that sense of having something others don’t have, right? That’s it. We are not here to discuss art intellectually. The message we want to pass on is that Art is an excellent intangible asset you can buy and pass on to keep wealth flowing through your family.
Teach your kids financial education
Of all the points we have been making, we believe this is the most important you should hold on to. No matter the amount of wealth you leave behind, it will vanish except in the hands of those who know how to manage it. You can relate to this if you know lottery winners. They hit a fortune and later lose it all. That’s all because their financial capacity is set for low volume. If you want your kids and grandkids to keep your wealth, you will need to give them proper financial education. This alone is enough for them to rise on their own to the top. And now that they are already at the top or have a lift halfway, it’s even easier for them to keep the position from generation to generation. We see this in Walton, Mars, and other wealthy families.
Choose the right partner
This might be strange to you, but it’s one of the most important truths you will hear today. Birds of a feather flock together, right? That’s marriage described in a simple proverb. So, what happens to birds with different feathers? Although the proverb does not include the answer, we can guess they flock separately. Divorce is one of the most disastrous events that can easily screw up your wealth. It has not even reached the next generation, and half of it is gone like a forgotten missile. Your partner also has a great role to play in keeping your legacy alive through generations.
Create a trust account
Trust, as the name implies, is one of the sources rich people rely on for guarding and preserving their wealth. It’s a legal entity with the function of locking assets and funds to be rightfully transferred to the beneficiary based on set arrangements and agreements. It usually involves three people; the funder, also called the grantor, the trustee that holds the money, and the beneficiary who will receive the wealth at due time. This idea is good for your goal of creating generational wealth. One, it puts a restriction on how your money can be blown around and provide a better tax advantage. When it comes to trusts, you have control over how you want your money to be spent. This control allows you to structure your conditions creatively such that they can last longer in the hands of your progeny. Here is a creative suggestion that can help. Give your beneficiary withdrawal access to only five per cent of the trust every year. This will allow for compounding interest as the remaining earnings are added back to the capital. You know how the rich do it. Build the tree and let them keep bearing fruits forever.
Train your children to take over and be better than you are
When you check the statistics, you will realize that more than sixty per cent of the millionaires presently breathing on this planet are self-made. This alone is enough to reverberate the importance of teaching your kids your wealth secret and training them to build one of themselves. No matter how wealthy you’re, your children should make their own money, manage and grow it. That will put them in a qualifying position to be a successor that keeps on your legacy. Now is the right time. Get them in the system now, so they have the experience and grow better than you.
If you love this blog, please hit the like button and share this with others so they can also benefit from it. We release useful information like this from time to time, and you won’t want to miss out. Remember to also signup to our newsletter for more updates. You can check out also these related posts on Money Saving Tips During Inflation. Have you ever thought of building generational wealth? How do you plan to make it possible? We’ll love to know your answer in the comment section below.
Recommended books for further reading:
- Intelligent Investor: The Definitive Book on Value Investing – A Book of Practical Counsel
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits
- Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!
- Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage
- How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
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