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Smartest way to build generational wealth

Posted by DanbelProInv on February 16, 2022

You may have heard the term ‘generational wealth’ and thought, “Wow, that sounds important.” But at the same time, you might have pushed it to the back of your mind because you have more pressing issues.

For instance, you might be focused on getting out of debt, saving money, or pursuing other financial goals. It may be that creating generational wealth is not on your immediate priority list while you tackle your current finances. But with that being said, you can still build it into your long-term financial goals.

Not quite sure what transitioning generational wealth means exactly? Don’t worry! We’ll be sharing exactly what it is and how to build it for your family.

So, what is generational wealth?

It is basically wealth that is passed down from one generation to the next. You may also hear this called family wealth or legacy wealth. If you are able to leave something behind for your children or grandchildren, then you are contributing to the growth of generational wealth in your family.

Of course, you may leave many things such as good memories and healthy genetics behind for your family. However, We’re specifically referring to the financial resources that you are able to leave behind.

This wealth can come in many forms, such as real estate assets, stock market investments, or a financial education to carry forward into the future.

Why is generational wealth important?

If you are starting from scratch with your finances or starting out with a large debt burden, then you should realize the importance of generational wealth.

As you continue your personal finance journey, you have likely discovered that it is not always easy to recover from your financial mistakes. What if your parents had been able to offer solid financial guidance as you stumbled your way through? It could have prevented spending beyond your means or started you on a budgeting habit much sooner.

The more you think about your own financial life, the more you realize how important generational wealth can be. If you have kids or plan to have kids, then you may start to think about how their financial futures will play out.

Imagine how differently things could turn out if you take the time to educate them on personal finance and set up vehicles to add security to their financial future now. So, let’s get into how to create generational wealth!
How to build generational wealth

The concept of building generational wealth is easy. You simply have to acquire assets or save cash that you don’t intend to spend in retirement. Then you pass those assets along to your children when you pass away.

This sounds easy in concept but can be difficult to put into practice. If you are struggling to build your savings, then saving for the next generation can sound overwhelming. And that is completely understandable!

It is critically important to nail down your own retirement savings plan and other financial goals before you start to save for generational wealth. Once you have a handle on your current finances to fund your golden years, then it is time to start saving beyond that.

So how should you start to save for generational wealth? Here are some of the best ways to start preparing to leave a legacy of wealth behind for your children and grandchildren.

1. Invest in real estate

Real estate is an excellent way to build generational wealth, from the tax advantages it provides to property appreciation.

Real estate is a pretty unique asset class with a range of underlying characteristics and strategies that can serve multiple purposes for an investor. This asset class inherently has lower volatility and low correlation to stocks and bonds, which can improve the risk/return profile of a portfolio. Real estate investments can help anyone looking to build a portfolio.

The idea of building a real estate empire can be intimidating. But it doesn’t have to be! You can start with the purchase of a half plot of land at any of our estates. If you continue to buy land and properties one at a time throughout your life, then you might be surprised at how quickly your real estate portfolio can grow.

2. Invest in the stock market

The stock market is how to create generational wealth over the long term. If you are aiming to build generational wealth, then it is a great option because it has the potential to continue growing for decades.

Investing in the stock market might sound scary if you’ve never tried it. However, it is an important way to build wealth in your lifetime and beyond.

Now you know how to build generational wealth, but you’ll also need to create a plan to start. Here’s what you will need to do to ensure a smooth ride for your assets as they transition to the next generation.

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