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How to Grow and Preserve Your Assets for the Next Generation

February 21, 2024

If you have a desire to build wealth for yourself and your loved ones and you are starting from ground zero, you are considered a first-generation wealth builder. Building generational wealth that will support you and your family now – and for generations to come – requires that you utilize the right financial strategies. While it can certainly seem overwhelming to figure out where to start and what future steps are necessary, having the right information can help you proceed with confidence. Below, we discuss four strategies for building generational wealth that may be helpful as you get started.

Consider Insurance Options

Life insurance is often an overlooked tool to build generational wealth. Its value as a means to provide an inheritance for your loved ones after you pass is powerful. With the exception of single premium life insurance1, most life insurance policies give you ability to pay the premium over time while giving you the same financial protection in the short term.

Permanent/whole life insurance policies provide coverage for your whole lifetime as long as you pay your premium. It has a cash value that can grow and earns interest on a tax-deferred basis.2

Term life insurance is an affordable option and is the least costly because it provides a death benefit for a specified time frame, though it does not feature a cash value. Term life insurance is typically a good option for those who are in the beginning stages of wealth building. It’s most often purchased by younger, healthy people to ensure that their beneficiaries receive a cash benefit that is income tax-free in the case of your unexpected demise.3

Note that premiums for permanent life insurance are more expensive than for term insurance. However, as your earnings grow, purchasing a permanent life policy may be a good strategy for building generational wealth. With the combined opportunity for cash value growth and tax advantages, it can be a sound strategy to transfer your wealth directly to your beneficiaries or as part of your estate plan.

Know That Not All Debt Is Bad

Most of us cringe a bit when we think about debt. However, not all debt is created equal – and it’s not all bad. For first-generation wealth builders, there are some types of debt that can add value as you build your wealth. Sometimes referred to as ‘growth-focuses’ such debt includes:

  • Higher Education
  • Purchasing a home
  • Starting a business
  • Property Investment

There’s no sure way to know if your ‘debt investments’ will pay off. However, by being thoughtful and strategic, it may be worth the risk if it helps you build your wealth in the long run.

Make Your Work Pay-Off

If you’re intent on being a first-generation wealth builder, then you know that you’ll need to work harder and smarter than most. Whether it means being a star employee to help you earn that promotion, adding a side hustle or second job, or learning to save and invest that extra income, smart planning will put you on the right track toward your wealth-building goals.

It’s a key wealth-building move to take the extra income from any of your additional work or added pay and invest it straight away. While it may be tempting to use that money elsewhere from time to time, it won’t increase your bottom-line. Keep your eye on your long-term goal of building generational wealth.

Pass it Along

There’s much more to building wealth than your own financial security. Helping your family and loved ones can not only provide you with satisfaction, but you can also enrich the lives of those you care about. Investing in college funds, helping someone gain housing for a stable living condition, or providing for transportation to get to their job can be meaningful moments in your wealth-building journey. 

Passing along your wealth for the purposes of your loved ones’ future financial well-being is also a practical way to pass along your knowledge of smart spending and investing. In this way, you can teach those you care about how to manage and value money. It’s among the most important things you can do as a first-generation wealth builder, and the returns can be immeasurable.

The Steps Towards First-Generation Wealth

Taking your journey towards being a first-generation wealth builder has many steps. It is a path that requires commitment and an intentional plan that can lead you toward your goals. Make sure you have the help and information you need to guide you along the way. If you’re not yet working with a financial advisor, this may be a helpful first step.

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[1] https://www.bankrate.com/insurance/life-insurance/single-premium-life-insurance

[2] https://www.investopedia.com/terms/p/permanentlife.asp

[3] https://www.investopedia.com/terms/t/termlife.asp

This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability ofthe issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.