Building generational wealth should be a no-brainer, especially for people with kids. However, this is not something that most people will have in mind when starting a family. If you feel you are at that point in life when you think you are ready to take the next big step, below are some steps worth taking as you start building wealth for your family.
1: Set Up A Trust
You will need to set up a financial safety net for your family. The best move regarding this is to have a trust fund. However, exercise caution when setting up the trust fund because most have turned into financial nightmares for some people. Nevertheless, a trust fund can be a powerful security tool that gives you control over your wealth and its disbursement after your demise.
It is possible to avoid probate and some taxes when you place some of your assets in the trust enlist the assistance of estate planning solutions. As such, your kids’ inheritance will be sheltered from taxes and legal fees that arise when handling your estate plan.
In addition, you will decide the terms of inheritance to ensure who the beneficiaries are and what each gets. For instance, you can declare in the will that each child is entitled to their share of the inheritance and will receive then in increments or after meeting a particular milestone.
Trust funds are a wise option for any family and worth setting up during the humble beginnings. Strive to add to the trust fund over time and use it to grow your investment portfolios. Below is a guide we have compiled that can help shed some light on setting up a trust fund for your family.
2: Invest Your Money
Growing your wealth is a process. It takes time and demands you have an appreciation for working hard to realize your dreams. But you can manage your time and effort better when you make wise investments.
It starts will tracking your spending habits and being intentional about saving. Have a savings account in which you put away some determined amount. However, savings accounts do not always stand the test of time. Inflation and unexpected life events are some of the dominant factors that will see the dollar’s value today be a fraction of the same in your kids’ future.
Therefore, the saving in your account could potentially be a devalued lump sum. But you can mitigate such an outcome by dipping your money in investments that will be worth a lot more by the time your little ones receive their inheritance. Some of the ideal options worth considering include:
- Bonds
- Real estate
- Stocks
- Certificates of Deposit (CD)
- Annuities
- Mutual and exchange-traded funds
- Commodities
- Retirement investment accounts
- Cryptocurrencies
3: Start A Business To Pass Down
If you relish going in business, then embrace the entrepreneurial disposition and start something you will own. Family-run companies are some of the influential players the pull the strings in the world’s commerce. They account for a significant amount of the world’s wealth. Family business makes up 57% of the GDP (Gross Domestic Product) in the United States.
However, most startups will never go beyond a few years, failing soon after coming up. If your venture becomes a success story, you will have a legacy to pass to your children and their future generation. They can choose to further your vision or sell off the business to re-invest in other interests.
Disclaimer: This content does not necessarily represent the views of IWB.