The Financial Aspect of Intergeneration Month
September was International Intergeneration Month. The purpose of this awareness month is to encourage people of all ages to connect with others from different generations. The idea is to learn from one another.
Another take on this month is the idea of sharing your success with the next generation. Not only can you share ideas and strategies that have worked, but you could also set up a way to pass on the wealth accumulated so that they can get a head start in life.
What exactly is intergenerational wealth?
September was International Intergeneration Month. Learn more about the idea of sharing your success with the next generation.
The definition is simple. It refers to the assets that the older generation of the family passes to the younger one. The assets may include family business, stocks, bonds, other financial securities, property, and commodities.
Intergenerational wealth starts in one generation with a smart financial strategic plan. Their assets grow through compounding interest over time. If they’ve done a good job of accumulating wealth and they don’t spend it, they can bequeath it to the next generation.
“If the beneficiaries continue to implement sound investment strategies and leave the principal untouched, they would be able to pass the same or more wealth to their children,” says Scott Mass, Senior Vice President, Investments for David Lerner Associates. “You can build wealth with the sensible middle-ground of investing.”
Here are some ideas for building wealth you can pass on to the next generation:
Start a Profitable Family Business.
Although many of the wealthiest families in America originally made their money from a successful business, this is not the easiest route. Only about 30 percent of family businesses are internationally successful. You can increase the chances of success if you involve the younger generation as early as possible and teach them financial literacy basics. The more education and experience they have, the better the chance of passing on a profitable business.
Real Estate
Investing in real estate and creating a rental business is an excellent way to create an intergenerational wealth vehicle. With this strategy, it’s also important to get the next generation involved as early as possible so they can learn the ropes. Then when they inherit this rental business, they will maintain the growth and eventually pass it to their kids.
Use Life Insurance Policies as a Wealth Strategy
Life insurance policies are not just for taking care of your family and loved ones after you pass. Some life insurance policies can be structured to build wealth that can be passed to the next generation
Talk to your financial advisor and find out how you can put this strategy in motion.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC