What is generational wealth?
Generational wealth refers to wealth that is passed down from one generation to the next. It’s all about creating a legacy of family wealth whereby you are able to leave financial resources behind to support future generations.
Providing your children with financial support could give them a significant head start in life. It could mean that they are spending less time paying off debt and more time saving for a house. It’s all about providing them with the best opportunities for success.
Strategies for achieving generational wealth
Generational wealth can be achieved by acquiring assets and saving money that isn’t eaten away in your retirement. When you pass away, your wealth is then passed on to the next generation. It sounds straightforward, but there is plenty of planning involved to reach this point.
1. Financial education
There is no point in creating generational wealth if your children are unable to use smart strategies to maintain it. If you are passionate about creating generational wealth, you need to teach your kids about personal finance so that they can use their knowledge to project and build on their wealth. You can start when they are young by teaching them about bank accounts, pocket money and saving for the future.
2. Long-term investments
If you are considering investments, think about how investing in the stock market or in real estate could benefit future generations.
Investing in low-cost index funds is a strategy that will allow your children to benefit from long-term growth. Similarly, a property portfolio provides opportunities for steady cash flow and increasing values will allow your children and their families to benefit from your assets.
We recommend speaking with a Financial Planner before making decisions around investments as the details of these decisions are always unique to each family.
Learn more about APS Financial Planning
3. Life Insurance
Protect your family with a life insurance policy that will allow your children to avoid financial tragedy. Life insurance will give you greater peace of mind, knowing that your loved ones have a financial safety net, should the unexpected happen.
Learn more about APS Life Insurance
4. Create a will and estate plan
Creating an estate plan is a crucial step to ensure that your wealth is passed on to the next generation. When you create your will and estate plan, you can specify exactly how you would like your assets to be distributed. Clear guidelines in your will are the best way to avoid arguments between family members and beneficiaries.
Learn more about APS Wills & Estates
Curious about generational wealth?
Knowing that you are supporting your children with the best opportunity for success is a truly rewarding experience but it isn’t easy to achieve without a strategy in place. There are plenty of strategies for creating generational wealth, but each looks different depending on your unique financial position.
We recommend speaking with a Financial Planner to discuss your goals and objectives.