Saving for grandchildren: How to build generational wealth | Personal Finance | Finance
Building a generational heritage can be the key to ensuring the sustainability of your family and legacy and while it may seem like too big a goal for a lifetime, building it is actually quite simple. Usually, putting your own finances first by paying off debt and savings is the first step, but even that is not entirely necessary to build generational wealth.
While building generational wealth isn’t about becoming a billionaire, it can pave the way for your children, grandchildren and great-grandchildren to live that life of luxury.
The richest families in the world, like the Waltons who own Walmart and have a net worth of $ 215 billion (roughly £ 161 billion), are masters of this practice, which has given them such a great financial position. and social over the decades.
One of the easiest trends to spot with these ridiculously wealthy families is the fact that very few of them pass their wealth on in the form of money but instead use asset accumulation to build their wealth.
In theory, this is the simple part: acquire assets and savings that one does not intend to use in retirement and ensure that they are passed on to their children when they die, but which assets are really worth considering?
Clever Girl Finance shared the six different ways to build generational wealth on their website.
Invest in the stock market
Because the stock market often requires a lot of patience and time, it is arguably the most common way to build generational wealth for the long haul and there is no shortage of gurus for advice.
Investor mogul Warren Buffett has continually supported the stock market, saying in 2017: “Always buy a low-cost S&P 500 index fund. Keep buying it through thick and thin, and especially through thin.
Invest in real estate
Owning the right kind of property in the right location can build one for life with consistent cash flow and appreciation in value over the years.
While it’s not easy to scale the real estate ladder these days, paying off your mortgage as early as possible and buying more properties can quickly snowball into a real estate empire that can be passed on.
BNY Mellon Wealth Management private equity portfolio manager Reuben Bianchin commented: “Over the past two decades, private real estate has provided a consistent level of income with average annual returns of four percent where there has been a consistent level of performance. It is very attractive to a certain type of customer.
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Set up a business
This is where the Walton family made their mark with the founding of Walmart in 1962. Since then, the business has been passed down to the present generation, Jim and Alice Walton, worth $ 54 billion (approx. £ 40 billion) each.
Not all businesses are guaranteed to be successful, and not on the scale of Walmart, but it is a sure-fire way to generate income after death.
For this to work, children need to be involved and included in the business from an early age, knowing how to work and what it needs to be successful.
Moreover, one also cannot force his children into the business, and if it is clear that they do not intend to run the business, then selling it can create a fund just as well. important for generational wealth.
Life insurance
In the event of a tragic or unexpected loss, life insurance can often save the day and deliver what you never had the chance to do.
In addition, the premature death of a breadwinner can cause great financial stress on the family left behind and life insurance can help fill in the gaps to avoid financial tragedy for generations. following.
Invest in education
Learning and honing in-demand skills can help secure higher paying jobs while ensuring that a solid financial education can maximize the opportunities one has with the salary they are already receiving, regardless of size.
Emphasis should also be placed on teaching personal finance and good money management at home.
Put simply, children cannot maintain existence of what they have never been taught, so helping them learn about budgeting, taxes, wealth building, and debt will help ensure that whatever is needed. ‘we leave them after their death, they will be able to handle it well.
Education is becoming more of a burden, however, with average student loan debt exceeding £ 45,000. As such, good planning and saving are necessary to avoid this debt – or, if it cannot be avoided, it is imperative to pay it off as quickly as possible.
Create multiple sources of income
Saving, investing and paying off debt is incredibly difficult if you live paycheck to paycheck. Although they cannot increase their salary at just one job, they can increase their income by creating multiple sources of income.
The average millionaire has multiple sources of income, which means that if one fails, it probably won’t even affect their net worth.
This technique helps to harden one’s financial stability against tragic circumstances like a dismissal or an accident with long term effects.
Xavier Epps, financial expert and founder of FinanceGuyX, said this method could be incredibly lucrative for younger people: “Young people have more skills and access to resources today than older generations – they can transform their lives. leisure activities in ancillary activities that can supplement their income. If their side business is doing well, they may consider quitting their nine to five job and become a full time entrepreneur with more control over their financial growth.
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