Accumulating assets beyond your living needs creates generational wealth, which are assets that are transferred to the proceeding generations. These assets include cash, real estate, land, equity stakes, securities, businesses, and other transferable items of value.
Creating generational wealth can significantly alter and improve the living circumstances of generations to come. These assets can be used for education, purchasing a home, funding a business, living expenses, and retirement. Conclusively, building generational wealth is transformative for any family. With sufficient evidence that proves that leaving behind a financial legacy changes lives, you would think more people would intentionally leave behind wealth, but that is not the case.
The definition of insanity is doing the same thing over and over but expecting different results. This concept perfectly aligns with building generational wealth. People think, spend, and behave the same as past generations who did not leave behind a legacy; therefore, there are no differentiating factors to break generational curses. Building wealth that you will not outlive requires discipline, fortitude, and sacrifice.
The average person doesn’t leave behind a legacy because they don’t accumulate assets. Instead, they spend their lives living paycheck to paycheck, burning through any money they earn. If you want to leave a legacy, investing your money is imperative. Einstein called compound interest the eighth wonder of the world because it miraculously compounds (grows) over time. One of the most common ways to transfer wealth is investment portfolios. Wealth is built over a lifetime, so dollar-cost averaging throughout your life increases the probability of leaving behind financial resources.
Another strategy for building and transferring wealth to future generations is real estate. Owning properties creates flexibility for whoever inherits it. What makes real estate unique is that it can generate cash flow and be sold or borrowed against through Home Equity Lines of Credit (HELOCs). Generationally, as properties are held long-term, they tend to appreciate in value. The two primary means for transferring wealth to generations are properties and investment portfolios.
While there is no guarantee someone will accumulate assets or wealth over their lifetime to transfer, there is one way to ensure you leave behind a financial legacy. The solution is Life Insurance (LI). A high-level overview of LI is paying a monthly premium for a death benefit or a payment to your beneficiary at death. For instance, if I die a young and sudden death, my family will instantly become millionaires because of my LI policies.
Again, creating wealth requires fortitude and discipline. Although I am in an asset accumulation phase, I still have a plan in place to guarantee I create economic opportunities for future generations. We can all build generational wealth with proper planning. Are you going to leave behind a legacy for your family?
