Intergenerational wealth, the transfer of assets and financial prosperity across generations, is a goal for many families. If you want to secure the future of your children and grandchildren, you must be actively working to build intergenerational wealth.
The era of landed gentry, with an estate and acres of land to leave behind, is long gone. In these modern times, you don’t need to just secure your own financial future but also that of your descendants and dependents.
Approximately 90% of all the UK private businesses are owned by families, and they want to ensure that their businesses thrive and are passed down through several generations. However, when it comes to building intergenerational wealth, there are also some hiccups you may have to deal with, like taxes or inflation.
Let’s look into a few effective strategies for building generational wealth that passes the ravages of inflation, time and taxes.
Start with Estate Planning
Having a well-thought-out estate plan is the first step towards beginning early financial planning. Estate planning includes creating a will, a power of attorney (POA) or a trust. Fortunately, a lot of this can be done from the convenience of your home. You can consult a lawyer, draft your will and make an LPA online, making the process quicker and easier.
Some of these documents are incredibly crucial. For example, a power of attorney enables you to give someone legal responsibility to look after your financial assets. For guidance throughout the process, make sure to consult your lawyer.
Start Planning Early
You do not have to be over the age of 60 to begin planning for intergenerational prosperity. It is best to start with estate planning as early as your 40s or even before. Getting a head start with your investment can allow you to leave behind a considerable amount for future generations. This is especially important in the current financial climate, where inflation is high, a recession is looming, and saving rates are at an all-time low.
Invest in Real Estate
The best way to build generational wealth is by investing in real estate, which can include apartments or even land. You can rent your property and earn a steady rental income. Property value in the UK is on the rise, which means you can not only have a steady rental income but also procure a good sum when you sell it in the future.
You can further invest the rental income into stocks or mutual funds, ensuring you get a good income over your lifetime and also leave behind a handsome amount for your children.
Diversification of Your Investment Portfolio
To ensure your investment has the best results, you must work on diversifying your portfolio. Instead of just investing in one kind of bond or mutual fund, it is best to invest smaller amounts in multiple investment profiles. This will help you ride out any market downfall.
You can invest your money in bonds, mutual funds, exchange-traded funds (ETFs), children’s savings accounts, and pension schemes. This will ensure you not only remain financially stable during your lifetime, but you will also provide a safety net for your future generations.
You can also take out different insurances, like term insurance or whole life insurance.
Promote Financial Literacy
To build and preserve generational wealth, you must work towards financial education, not just for yourself but also for your loved ones. Your family members, friends and loved ones would benefit from learning about investments and understanding the economic climate, especially to grow their wealth.
You can also fund the younger generation’s education, making them independent, so that the intergenerational wealth works as the safety net, and not simply their only means of sustenance.
It is important to instill an understanding and value for money from an early age so that they become financially independent in the later years.
Conclusion
By following these strategies, you can ensure your family is well off even after you are no longer with them. Through intelligent planning and financial management, you can go on to create great wealth for your family.
It’s always a good idea to safeguard assets that can help your kids and grandkids survive future inflation and economic instabilities. Have you started saving yet?
