As a parent, you always have your children's best interests in mind. You want your kids to be able to provide for their own children, and the next generation, and the generation after that. To be able to do this, you can build generational wealth to benefit your family lineage. But what is generational wealth and how do you build it?
What Is Generational Wealth?
Generational wealth is wealth that is transferred from generation to generation. Wealth can include cash, real estate, antiques, securities, business ownership, and other types of assets. Another form of generational wealth is creating opportunities, such as paid-for higher education, the ability to take risks by having money to fall back on, or a position in the family business.
What's The Goal For Generational Wealth?
Your goal for generational wealth is completely up to you. You have full control over what legacy you want to leave for generations to come. However, several common goals of generational wealth are:
- Preventing financial struggles in the future
- Allowing your family members to choose a career path based on interest and not finances
- Providing education to your family members without the financial burden of student loans
What Are Ways To Build Generational Wealth?
Below are 5 ways to build generational wealth:
- Create Multiple Streams Of Income
Building several streams of income allows you to not stress about losing one source of income. Also, you can utilize income streams to fund investments or put them into savings accounts as a part of your generational wealth building. A few examples of income streams are business ownership, dividend-paying stocks, and rental properties. These income streams can also be transferred to the next generation to provide income for them.
- Investing In Real Estate
Real estate is a spectacular investment vehicle due to its appreciating in value over time. It's also a great way to earn cash flow from your investment, creating another stream of income. You can purchase property over time, turn the properties into rentals, pay it off over time, then give the paid-off property to your children. You could also transfer ownership of the income-generating rental property to your child. Or you could use the profit from the property to save for your children.
- Utilize Investment Opportunities
Investing is key to building wealth early and often. The earlier you begin investing, the longer amount of time your savings have to compound interest. For the best investment outcome, you want to have a diversified portfolio with a mixture of asset classes and stocks from different industries. This is one of the best ways to build wealth to leave behind to your family.
- Purchase Life Insurance
Life insurance can be a lifesaver. After you have passed away, you don't want to add the burden of financial strain on top of your loved ones' grief. To combat this, you can purchase a life insurance policy. A death benefit is a component of the life insurance policy that will be paid out to your beneficiaries upon your passing. This death benefit can also be tax-free if your total estate is below the tax threshold.
- Teaching Financial Literacy
Unfortunately, many schools do not teach a personal finance course. It is up to teach your kids, whether they are a teenager or an adult, about personal finance to make sure they are making smart choices and decisions. Building a foundation of financial literacy will set your children up for success.
You want your children to be successful and one of the best ways to do that is by building generational wealth. One of the best ways to ensure you're setting your kids up for success is by having an experienced financial advisor by your side. Our advisors at Genesis Financial Group are here to make sure you're on the right path to building generational wealth. Schedule your consultation today to get started.