In a recent survey from Ameriprise Financial, more than three out of four Americans (78%) said they have taken at least one step to build generational wealth¹ But what exactly constitutes “generational wealth” — and how can you achieve it?
The most common answer (44%), according to survey respondents, is wealth in excess of $500,000 that’s passed down to loved ones. Depending on your financial situation, half a million dollars may or may not sound like a lot of money. But one thing is clear: no matter how much you intend to one day bestow upon your family and friends, it helps to have a plan.
If you, like the majority of survey respondents (68%), say passing generational wealth onto your heirs is important to you, here are some things to keep in mind:
Strategies for growing generational wealth
- Be a strategic saver. Rather than leaving wealth accumulation to chance, strategic savers set goals and work to actively increase their savings. They make regular contributions to savings accounts. Active saving curbs spending and influences earning behavior. They may defer purchases, work longer, pursue higher-paying employment, or make other choices (and sacrifices) to ensure their savings goals are met.
- Invest in stocks. Investors who are serious about income growth utilize the stock market. Most experts recommend a buy-and-hold approach to optimize earnings over time. A risk-adjusted, diversified, and balanced portfolio can help investors meet their investment goals.
- Invest in real estate. Historically, property values have increased over time, making homeownership a leading method of wealth accumulation. Investors may also diversify their portfolios with Real Estate Investment Trusts (REITS) and other purchases of property.
- Pass along financial wisdom. Financial values are another important asset to pass along to heirs. Many families find it beneficial to discuss their financial decisions with their adult children and stepchildren. Clear communication can help establish realistic expectations and avoid surprises and conflicts when it comes time to pass along your assets.
- Consider “Giving While Living.” Plans for sharing generational wealth can include giving now rather than waiting to hand down assets after death. Beneficiaries are often adult children but can also include charitable organizations. Giving in the present can satisfy the desire to help now and enable you to see the impact of your generosity. That said, it shouldn’t come at the risk of your financial security, so make sure you have the means necessary before writing a check to your favorite cause.
Building generational wealth is a lifelong process. Along the way, an experienced financial advisor can help you develop a financial plan and set achievable goals aligned to your estate planning needs. Your advisor can work with you and your estate planning attorney to ensure your will facilitates your wishes for sharing generational wealth.
¹Ameriprise Money and Family study (Money & Family: A new study on generational wealth)
Brett Ferguson, APMA, Financial Advisor, and Renata Garbowski, APMA, Financial Advisor are a part of AGP Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Bend, OR. They specialize in fee-based financial planning and asset management strategies. To contact them, visit our website at agpwealthadvisors.com or call 800-563-1636.
This information is being provided only as a general source of information and is not intended to be used as a primary basis for investment decisions, nor should it be construed as advice designed to meet the particular needs of an individual investor.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
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