Generational Wealth: The Basics

It is likely that in meetings with your financial advisors the topic of generational wealth has been discussed.

Many people have different perspectives on if generational wealth is right for their families. However, to increase financial literacy, it’s important to know a few basics about generational wealth.

What is it?
Simply put, generational wealth represents assets passed from one generation to the next. This may include investments in stock, real estate, liquid cash, business ownership, etc. You may also hear the term “legacy wealth” in exchange for “generational wealth.”

Real Estate
Real-estate is a long-term investment that can reap finances for both you and your future family. Some options may be a family, home, vacant property, or a variety of rental properties (residential or commercial). One perk of real estate investments is that initial investment doesn’t require the full amount of cash-in-hand, and it can be paid off over time while it appreciates in value.

Many families choose to invest in their children’s future through education. There are many options one can consider when navigating education savings plans.

  • 529 Plan—a 529 plan is a savings plan, typically sponsored by state governments, that promote saving for future education costs. They are ta-friendly and can quickly add up when contributions are made on a consistent basis.
  • Savings Bonds—an advantage of putting money into a savings bonus is that they are guaranteed by the government and are low risk. However, the interest rates are very low.
  • Savings account—while you shouldn’t expect a high return on investment, a savings account is a safe way to save money for educational expenses.
  • Savings bonds—there are rules and regulations from the government, but most of the time interest from bonds is tax-free if used for qualified educational expenses.

Life Insurance
Life insurance can help to protect your family from unnecessary financial strain. Contributing to a life insurance policy is easy, can be low-cost, and keeps you from having to track the money yourself.