All our lives, we work and save money. We’re saving for our retirement, but we’re not just saving for ourselves. We hope that, with hard work and smart savings habits, we can build a nest egg that outlives us. We hope that we can pass this wealth on to our children, and perhaps even to their children, and so on down through the generations.
But even for the wealthiest and most successful among us, this takes careful planning and work!
Investments: the key to generational wealth
It’s no secret that in order to create long-term wealth, you’ll need investments. Your grandparents probably told you stories about penny candy and making a few thousand dollars a year. That’s how much money was worth back then, and even if you saved an awful lot of it (by the standards of the day), it wouldn’t be worth much now. That’s because of inflation, which reduces the value of each dollar as time goes by.
Battling inflation means earning interest. You can do that in a savings account at a bank or a credit union, but the big interest comes from investments. That means stocks and bonds. So speak to a financial advisor and get into the market in a balanced, diversified way that reflects your goals.
Estate tax and trusts
You’re allowed to pass on money to your spouse tax-free, and what you leave to other heirs will be tax-free up to a certain amount of money. But above a certain dollar amount, Uncle Sam will want a share!
There are all sorts of ways to minimize your estate tax burden, but to make sure you’re using the wisest ones, you’ll want to speak to an estate tax lawyer. They may suggest that you keep your money in a trust, which is a special way to organize funds that will even allow you to designate rules, such as who can draw money from the trust and for what purpose.
Protecting your loved ones from financial burdens
Whether you’re super-wealthy or are just building a modest nest egg to pass on, there’s one thing you don’t want to leave to your heirs: costs. So invest in life insurance, which will pay out in the event of your death and will help insulate your grieving loved ones from the financial costs of your lost income, your funeral costs, and more. You can find reasonably priced life insurance policies through brokers like Our Life Covered.
Of course, with some luck, you’ll have a long life ahead of you – along with lots of future income from your career and your investments, which will form a nest egg that will protect your family for generations.