Almost everyone understands and accepts the idea of being survived by their children. But people only start to think of their work outliving them when they succeed or begin to amass wealth.
It is understandable to wonder who will take all you have worked so hard for if you have actual possessions. You want to ensure they can use the assets as you intended and will save your hard-earned, unimportant stuff.
When individuals begin to think this way, they have started generating wealth lasting for multiple generations. Investments created throughout the lifespan of a single generation and conserved for future generations are known as generational wealth.
Families with generational wealth can pass on their money to multiple generations of their offspring because they have a structure to safeguard, increase, and transmit that wealth. Two essential parts of this system are frequently present.
· Professional wealth management
The founder of the family knows that their children and grandchildren may need financial acumen or personal discipline to manage wealth effectively. To ensure that the assets are not lost to the recklessness or inabilities of their heirs, they appoint wealth managers who oversee the administration of the estate.
· A broad base of productive assets
They focus on building a solid foundation of productive assets (not depleting assets) to ensure their descendants have sufficient income for their needs. Productive assets can earn the owner’s income, which appreciates with time. On the other hand, depleting assets does not create income or increase their value; instead, they lose weight.
Can you build generational wealth?
All families with generational wealth trace their fortunes to a single individual or group who created that wealth. This person(s) not only acquired many assets in their lifetime but also designed a framework to ensure the wealth is preserved for future generations.
You can be that individual for your family. You can take actions today that will impact the lives of your descendants for hundreds of years to come. Every decision you make today will affect the lives of your descendants, whether those decisions are good or bad.
But you can be intentional about what kind of life you want your offspring to have by making choices that affect them in the best way possible. You do that by starting the journey to building a store of wealth you can leave your children and grandchildren.
Building generational wealth through real estate
As stated earlier, you need a solid base of productive assets to build generational wealth. Real estate is one of the best productive assets to invest in to build generational wealth. So, why is real estate an excellent instrument for creating multi-generational prosperity?
1. Control
Unlike stocks or mutual funds, where investment fate is in the hands of asset managers and company executives, real estate offers investors more control. The investor can still make important decisions even when the property is under professional management.
2. Cash flow
When investing in real estate, investors make money from two sources: rent and capital gains. Cash from a rental property can provide enough money to cover the property’s expenses and meet the owner’s needs, primarily when those properties are free and clear.
3. Passive income source
Under the care of professional property managers, a property investment– typically an active investment that requires the direct participation of the investor – becomes a passive investment. Passive investments are ideal for building generational wealth because the income source is separated from the time and competence of those who inherit the asset.
4. Stability
Real estate has no volatility often associated with stocks, currencies, or commodities. This is because real estate is not as vulnerable to economic changes. Real estate values respond much slower to economic shocks than stocks, and they recover invariably.
5. Sustained value
Property never loses one hundred percent of its value; its value will never fall to zero. But this can happen to stocks if a company’s products fall out of demand or the business ceases to exist. On the other hand, because real estate is a tangible asset, it will always be there, making it a very secure investment.
6. Unrivaled leverage
Real estate investing offers investors the power they would never get with other assets. While a bank will not even give investors money to buy its shares, it will happily loan them money to invest in properties. Furthermore, with just a fraction of the value of a property – 25% – an investor can control the asset as if they owned 100% of it.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
