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What is generational wealth?

Generational wealth is any source of money or something that has a monetary value that descendants of a family have access to. It is wealth handed down from one generation to another.

It is important to understand what an asset is and what a liability is. This is because generational wealth are assets that can benefit the descendants of the person who builds the asset even though the builder is no more.

But it is very common for people to confuse a liability for an asset. Understanding the difference between asset and liability will help you know the worth of your inheritance and what to invest in for the next generation.

 

Benefits Of Generational Wealth And How To Build It
Generational Wealth and how it works

 

So what is an asset?

An asset is something of value that can generate money. It is anything that puts money into your pocket. While liability is anything that takes money out of your pocket. Liabilities are expenses.

But what makes something an asset or a liability is defined by how it is been used. A house can be a liability or an asset at the same time.

READ THIS: Emergency Fund: How To Set It Up For Your Small Business

For example, a residential house is a liability. What makes it a liability is the expenses that it generates for you to take care of as you live in it. Residential houses raise issues of repair; repairing of applicants, equipment, facilities, etc. And to make these repairs you have to take money out of your pocket.

But a rental house is an asset because it puts money into your pocket. You give out the house to get money in exchange on a daily, weekly, monthly, or annual basis. The expenses that will arise in the house are the residents responsible.

 

Benefits of Generational Wealth

The following are some benefits of generational wealth.

  • Generational wealth enhances a better life. Generational wealth makes it easier for the inheritor to easily adapt to life. With an inheritance accessible unto them, your children and grandchildren can easily raise their standard of living and live more comfortably in life.
  • Generational wealth increases one’s opportunities in life. For instance, a descendant of a famous personality can get special privileges and preferences if they are recognized. Your connection will help them get the upper hand in society. Children whose family has one or two companies can work there as well after graduation instead of looking for a job.
  • Generational wealth automatically creates wealth for the inheritors. This saves them the time to work out their wealth. Rather, they will be looking for a way to multiply the available wealth instead of building an entirely different one.
  • Generational wealth saves the time of the inheritors. This is because instead of starting from scratch, they already have something tangible to build on.
  • It raises funds for investment in the placement of alternatives like loans.

 

Types of Family Wealth

As earlier stated, generational wealth are assets. But an inherited property could be an asset or liability depending on how it is been used.
A car used for transportation and delivery services is an asset as it will generate money. Quickly check different ways to make extra money with your car.

But the same car will become a liability if it’s used for personal convenience because of the expenses it will arise. e.g. buying of fuel/gas, repairing of the engine, changing of tires, etc.
Nevertheless, the following are some generational wealth;

  • Real estate
  • Stocks and bonds
  • Properties
  • Intellectual property, e.g. trademarks, copyright, patents, and trade secrets
  • Life insurance
  • Antiques like arts and collections
  • Precious metals, e.g. gold, pieces of jewelry
  • Companies
  • Home Ownership
  • Cash and equivalent
  • Machinery
  • Education; investing in your children’s education is an asset as the education they acquire will enable them to strive well in life’s journey.
  • Transportation equipment
  • Investment funds

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How to build Generational Wealth that last

Building wealth is easier than you can imagine. The most essential part is to know the difference between an asset and a liability so that you will invest in the right thing. As earlier stated, assets put money into your pocket while liabilities take money out of your pocket.

An asset is a tangible or intangible resource that has economic value. So, to generate money focus on building assets that can last long and generate continuous revenue.
You can invest in any or all of the following and beyond to establish a generational wealth;

  • Real estate
  • Stocks and bonds
  • Properties
  • Intellectual property, e.g. trademarks, copyright, patents, and trade secrets
  • Life insurance
  • Antiques like arts and collections
  • Precious metals, e.g. gold, pieces of jewelry
  • Companies
  • Home Ownership
  • Cash and equivalent
  • Machinery
  • Education; investing in your children’s education is an asset as the education they acquire will enable them to strive well in life’s journey.
  • Transportation equipment
  • Investment funds

READ ALSO: 6 Passive Income Ideas That Will Build You Real Wealth

 

Why some Family Wealth Don’t Last

It is recorded that most families lose 70% worth of their inheritance in the first generation, and all that’s left in subsequent generations. There are so many factors responsible for this and below are some of them:

  1. Lack of knowledge and experience: Generational Wealth is benefited by the descendants of the inventor. Mostly, those who inherited these assets lack knowledge of how they get into being, the price paid on them, etc. Thus, there is mismanagement and incautiousness once they take over. Thus, there’s a need to carry your descendants along while building up wealth for them. Plus, it is a good idea to hand over temporary while you are still alive to see how your successors manage your resources.
  2. Time factor: An asset of today may lose its value tomorrow. For instance, the latest car today will worth millions but in subsequent years the price will not only drop, but the taste will drop as well. So, while building assets there’s a need to ensure that they embrace and meet the needs of the next generation. And continuous innovation will go a long way in restoring the value of the asset.
  3. Lack of communication: When the next generation is not instructed on how to go about the management of a company or an asset, they will lack the technique to so do so once it’s handed over to them.

Thus, it is necessary to include those available when building generational wealth. Involve them in decision-making and execution.

 

a person holding dollar bills

 

In this day and age, many people aspire to develop their own businesses. In order to make your dream a reality, it is crucial to have two things – a drive and an idea. If you are reading this article, it must be that you have the necessary amount of drive to get rid of the shackles of toiling away the best years of your life in an office. And it is no wonder, since you are just one idea away from changing your life from the ground up. Inspire yourself to make the most out of your life – check out these 6 passive income ideas that will build you real wealth below. 

What are the first steps to implementing a good passive income ideas?

But first, you need to fully acknowledge that embarking on this journey towards making your own first million is more than just a pipe dream. Why, you ask? Because it is necessary for you to treat your plan seriously. If you do not take yourself seriously, nobody else will either. The realization that you believe in your project is the very first step towards realizing it. So, shake off any insecurities that might have gotten under your skin over the years of working for somebody else’s dream. Now it is time for you to live your best life – fearlessly. 

 

Now that we have, hopefully, encouraged you to go out and start thinking about your future, we have some potentially bad news. Every single person has the potential to do amazing things, and it is what you can do with this information that will determine the course of your plan:

 

  • You can look up to the successes of other ingenious people to inspire yourself to do better. Keeping in mind that you need to outdo your competitors in your line of work is a healthy way to deal with the fact that the competition is numerous and frequently ruthless. 

 

  • You can look for a like-minded individual that will help you fulfill your business plan. Perhaps you need the expertise of an IT software engineer or an economist to kickstart your idea? Brush up your social skills and contact the people who share your vision.

 

a machine and three men talking in the background

Surrounding yourself with one or several experts in a certain field will bring you closer to realizing your passive income ideas.

 

Align yourself mentally with one of these two courses of action. Think about what stimulates your ambition best – is it healthy competition or a supportive, skillful partner?

6 Passive Income Ideas That Will Build You Real Wealth

Now that we have hopefully lit up your dormant drive, it is time to look at some almost fool-proof passive income ideas. Even if you have your own unique vision, in our opinion, it may be useful to have a change of perspective once in a while. 

 

man looking carefully at his laptop in a cafe

It is crucial to devise every step of your business plan carefully. 

Blogging, Vlogging – Capitalize on your unique outlook on life

Compared to usual passive income ideas, blogging is different because it can be either surprisingly lucrative or completely unprofitable. It mostly depends on your personality and your unique approach to a certain component of life. 

 

It is a common misconception that only extremely good looking or talented people have a chance to become successful bloggers. There is more to life than good looks, and some of the most successful bloggers, vloggers, and YouTubers made a fortune by forefronting the qualities that, in fact, have nothing to do with physical appearance. 

 

A woman pointing to the American Midwest with her belongings on a table

Turn your love of travel into a profitable passive income source by blogging or vlogging about your trips.

 

YouTube

Check out PewDiePie, Jenna Marbles, Casey Neistat, Vsauce… The personalities of these YouTube alumni won people over with their unique mixture of quirkiness, knowledge, humor, and relatability. To achieve true greatness as a blogger, it is essential to look beyond the superficial and display what is humane and relatable in all of us. 

 

For example, if you are an avid traveler, you can invest in a good camera and show the online community what attracts your attention and what it looks like to experience the world through your camera lens. Gradually, you will have enough resources to live anywhere in the world and further upgrade your enterprise. Step by step, you will enrich your blog, and voila – you are living creatively and in a way that fulfills you, while making passive income.

 

Affiliate Marketing 

We will not spend too much time explaining what affiliate marketing is. You see it every day on the stories of Instagram influencers you follow – the everpresent sponsored label on stories and posts advertising face cream or powder protein is just one facet of affiliate marketing. However, you have to have a certain following to attract sponsors, so read our idea number one to find out how to start your online influencer career. 

 

Dropshipping your favorite goods

If you have not heard of dropshipping, it is a type of online shop in which you offer specific items to customers online. The catch is that you do not stock the items but buy them at an affordable price from a third-party seller when somebody orders it from your dropshipping page. 

 

You know the feeling when you cannot find something that you want to buy without spending hours searching for it online? Well, you can help people find that product now. Find a dropshipping website such as Shopify and start your own mini importation business!

 

Rent out your place on Airbnb 

If you happen to have a summer house or a cottage in the country, you might want to consider turning it into a source of passive income. You would be surprised how lucrative the travel industry is. So do not worry – even if the given accommodation is in the middle of nowhere, somebody somewhere will want to rent it, as different people prefer different types of vacations. 

a house with a grass roof

Renting your grandfather’s old house might actually be a profitable passive income idea

 

Invest Wisely

Again, this is where the business-savvy part of your personality comes in. As with dropshipping, you need to think of what is currently missing on the market, or what could be extremely profitable in a year or two from now. So, take a look at your surroundings – it might be the case that there are no vegan restaurants that make homemade food for takeaway, for example. 

 

A final piece of advice

Whatever you choose to do, start small and test if this is a viable business plan, and then build up your passive income, invest again to raise your passive earnings, wait for your passive income to pile up, and invest again. Essentially, choose one of our passive income ideas that will build you real wealth and follow this time-tested model. 

 

 

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