For some, money is a means to an end. For others, it is the end.

Everyone wants to be wealthy, and many want the ability to pass that wealth on to their children. Yet, so few are actually able to do so. Why?

For those who didn’t grow up with money, life tends to offer a greater array of challenges. Simple things become momentous and even overwhelming when your days are spent just trying to make ends meet.

Whether your goal is to be able to pay for your children’s college tuition, a down payment on their first home, or simply to help unburden them of many of the struggles that you had to endure, generational wealth is an incredible blessing to be able to provide.

If you want to leave a legacy, it’s worth learning how to build and transition multigenerational wealth.

Education Is Key

When people think about generational wealth, they tend to only focus on the money. However, a wealth of knowledge can be just as valuable. After all, it is no coincidence that 70% of lottery winners, regardless of the sum, end up losing or spending all of their winnings in the first five years.

Even amid the age of information, financial education is still one of the most critical, yet, least taught forms of education one can attain. And it’s not just about your own financial education. If you are serious about generational wealth, then you need to be serious about your family’s financial education as well. There is a reason that the vast majority of wealthy families lose their wealth by the second generation, and more than 90% fail to transition that wealth past the third generation. The money was passed on, but the knowledge of how to invest, save, and multiply that money, was not.

When it comes to your financial education, you don’t need to have all the answers, or spend countless hours every week researching the latest business and stock trends. However, it does require creating a solid foundation of investment knowledge, as well as making the right connections with those who can answer the questions that you cannot.

Chances are, if you’re reading articles in Think Realty, your financial education is a priority to you. The key is to take what you learn and pass it on. When you share your experiences and advice with those who will inherit your wealth, it increases the potential that your children will do the same for their children.

Making The Right Investment

The other major contributing factor to generational wealth is investing well. In order to build generational wealth, you need to start with the right opportunities. Historically, one of the best tools for creating and sustaining wealth has been real estate. It is the resource through which most millionaires in the last century have made and retained their wealth.

Unfortunately, this bastion of relative financial security is in a tricky spot for investors right now. The large firms have been acquiring significant portions of the available inventory, squeezing the market and pricing out smaller investors. And even those who can afford the inflated prices of current assets are finding that the cash flow potential yields a relatively marginal ROI. This has many looking for new ways to put their money to use.

In addition to real estate, cash flow businesses are among the best assets to pass on. Primarily, because they can continue to make profits long after the initial investment is made. With the right financial knowledge and a decent work ethic, these assets can perform well over numerous generations. Your children can’t inherit your job, but you can pass on a profitable business.

The key to investing is not to focus on where the money is right now, but where the money is going to be. For example, financial advisors with an eye to the future have been excited about one specific investment opportunity. It combines the long-term stability of real estate with the cash flow and profitability of a thriving business, which many have yet to realize. And for this sector, it isn’t dependent on what markets are doing, but instead, is driven by population.

During the next two decades, demographics in the U.S. will shift drastically. The enormous population of baby boomers is beginning to enter their senior years. And a large portion of them will eventually require senior housing and care. The senior housing market is set to explode and offers tremendous multigenerational wealth potential.

Regardless of where you decide to invest, if you want your wealth to last, you need to have a plan that aligns with your values. Business magnates like Rockefeller and Carnegie understood all too well that generational wealth had value far beyond money. They both spent the later years of their lives devoting their time and vast resources to large-scale philanthropy in the form of education, medicine and scientific research. The wealth they passed on not only provided for their own successive generations, but helped build and fortify communities across America.

Maybe it’s time to rethink the value of money. After all, it is not an end. It is not even a means to an end. In the right hands, it is a tool that can be used to help others more “fully experience life.”

Have you begun making financial plans further than your own needs? What steps are you taking today to ensure that your progeny will have opportunities beyond what was available to you?

 

  • Kurt Coleman

    Kurt brings a wealth of skills and experience to the RALAcademy team. A graduate of Arizona State University with years of experience as a team leader, systems developer, and writer. He is the lead copywriter for this incredible company that corners the market in the Residential Assisted Living niche. He loves writing and sharing with investors how to use their skills, know-how and expertise in the real estate industry to translate into this new exciting market.

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