Five Tips to Start Building Generational Wealth for Your Family

Eric M. Solve, CFP®, EA
Eric M. Solve, CFP®, EA

What You Need to Know to Secure Your Family’s Financial Future

Many of the world’s wealthiest people didn’t get there on their own—they inherited their fortunes from family members who had focused on building generational wealth. With the right strategy and planning, this type of financial legacy is within your reach, too. If you make wise decisions, you can build a solid foundation for yourself, and for your future family members, too. The five tips below can help you plant a seed that can grow for years to come.

1.    Start Building Generational Wealth: Have the Conversation

Many families find it difficult to talk about money, feeling that it’s taboo or simply an awkward topic. However, you can’t start successfully building generational wealth without open communication. In many ways, it’s the first step to unlocking your family’s financial potential.

Money is a topic that feels very personal, of course. Disclosing income, discussing investments, and divulging how much savings you have accrued can be uncomfortable, but it’s also critical. This will provide a level playing field and can help you know exactly where you stand. Once there’s a clear picture of the family’s finances, you’ll know how far you need to go to reach your goals.

2.    Bring Professionals on Board

Much of the process of building generational wealth comes down to the strategic details. How will it be transferred from one generation to the next? How are those transitions managed? Though each family is unique, one of the things that sets successful families apart is that they don’t go it alone, particularly when it comes to taxes.

If taxes aren’t considered up front, they have the potential to put a significant dent in any accrued wealth. Proper planning is the key, especially when you move into a higher tax bracket or are dealing with many types of assets. Believe it or not, taxes have the capacity to drain half of your wealth over the generations.

Financial advisors are great partners in helping you protect your hard-earned money and pass it from generation to generation in a manner that benefits everyone.

SEE ALSO: Tips for Creating a Multigenerational Estate Plan

3. Get Real About Real Estate

Real estate can be quite useful in building generational wealth, especially when you combine it with an acquisition. One of the best ways to start building your family’s financial legacy is to acquire businesses with real estate attached. Essentially, it jumpstarts wealth building by ensuring there’s immediate cash flow.

Say, for example, you purchase an apartment building. As the owner, you’ll immediately start receiving rent while also creating equity through asset appreciation and tax advantages. Regardless of the type of property, there could be significant value in this strategy for both the short- and long-term.

4. Don’t Be Fooled by Flashy

The hottest new trends and current investment fads may look appealing up front but remember they aren’t yet proven. The uncertainty that this kind of investment carries can become a significant liability. You’re much more likely to do well with investments that are proven and dependable.

Investing in the tried and true or “boring” areas may be less exciting, but it’s worked well for many of the world’s wealthiest people, including Warren Buffett, who relies on this strategy to drive most of his investment returns. Remember that building generational wealth requires playing the long game.

5. Diversify Your Revenue Streams

Strong savings is certainly a good place to start, but one of the best ways to protect and preserve your wealth is to make sure you have money coming in from more than one source. This is a useful strategy to weather unforeseen challenges and endure the test of time.

Consider monetizing your hobbies or taking on side hustles to supplement your income. Or maybe you have a bit of a nest egg and want to pursue entrepreneurship. Whatever your interests are, pursue them with income streams in mind. They can help keep your wealth safe and growing.

SEE ALSO: The Disadvantages of DIY Financial Planning

Building Generational Wealth Recap

Every family’s wealth begins somewhere, and there are steps you can take to start building generational wealth for your loved ones today. At Wade, we can help you create a strategy that serves your family’s unique wealth-building needs and goals. Contact us today to start the conversation. We look forward to hearing from you!

This communication contains the opinions of Wade Financial Advisory, Inc. about the securities, investments and/or economic subjects discussed as of the date set forth herein. This communication is intended for information purposes only and does not recommend or solicit the purchase or sale of specific securities or investment services. Readers should not infer or assume that any securities, sectors or markets described were or will be profitable or are appropriate to meet the objectives, situation or needs of a particular individual or family, as the implementation of any financial strategy should only be made after consultation with your attorney, tax advisor and investment advisor. All material presented is compiled from sources believed to be reliable, but accuracy or completeness cannot be guaranteed. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENTS BEAR RISK INCLUDING THE POSSIBLE LOSS OF INVESTED PRINCIPAL.

Wade Financial Advisory, Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Wade Financial Advisory, Inc. at (408) 369-7399 with any questions.

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