For those who are starting from scratch when it comes to their finances, generational wealth is important.
If you have never had the burden of paying back a student loan because your parents were able to fund your college education, then you have already benefitted from the generational wealth that has helped to secure your financial future. You can now focus your attention on saving for a home deposit or your retirement.
It’s never an easy task to be able to recover from financial mistakes–and if you had been given financial leg-up then you may have been able to avoid spending beyond your means and learned how to budget better. People who have struggled financially will be more than aware of the importance of generational wealth to prevent future generations from having to go through a similar struggle.
Good spending habits and wise investments will mean that when it comes to building Wills and Trusts for future beneficiaries, they will likely be left in much better financial health.
How Do I Help to Build Generational Wealth?
Building generational wealth means making investments that you don’t intend to use for your retirement. That means having to have your financial retirement plan in place before beginning to think about saving to build generational wealth in the future.
Where do you begin making investments to save toward generational wealth? Here are a few of the best ways to help to prepare to save a legacy for your children and the generations beyond.
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Purchase Real Estate
With the potential for study cash flows and increase in value over time, real estate is a major way to build a path towards wealth.
If you have already previously purchased your own home, then you will understand what a worthwhile investment in real estate can be. Buying more properties to add to your real estate portfolio can quickly grow your investments. This is a great option for building generational wealth, as real estate is an asset that will continue to increase in value the longer you have it. If you buy a property when your child is one year old and hold onto it until they are 18 years old then the price of the property is likely to have increased significantly over time. It may have only taken an investment initially of tens of thousands of dollars for 100s of thousands of dollars returned.
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Create a Business to Pass Down
Businesses are often full of potential for great financial success. Many family-owned businesses I’ll pass down to the next generation. Handling a successful business that can be passed on to your children, is a great way of building generational wealth.
While not all family and businesses make it down to the second generation, if the interests of the business align with your children’s then they may want to take over the family business. If not, the tools in which to manage their own business will be passed down to them. To improve the chances of a successful transition of an inherited business, include your child in a business from a young age. Teach them how businesses operate and how to continue the legacy. You see very early on whether they have any interest in taking over. Don’t try to force them to do it, though. When compiling your will, you should speak to a lawyer about what can be done with your business in the event of your death.
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Invest in Stocks
For people who know or want to know about investments then I will know that the stock market can be a great way to build long-term wealth. Using this as a method to Accelerate generational wealth will have the potential to continue its growth for several years.
Beginners may want to start with low-cost index funds which can offer low fees and long-term growth. Look for more information online about how to get started on future stock investments
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Take Out Life Insurance Coverage
Life insurance is a great way to protect your family in the event of your early death. Premature death can lead families into financial ruin. Therefore, making the effort to invest in a life insurance policy sooner rather than later can prevent a financial tragedy, as well as having to deal with the emotion of losing a beloved parent.
As a parent, you have to ensure that your children and the future generations have all the right tools in place to be able to build themselves up to be a financial success.