While being rich means that you probably don’t need to worry about money – within reason. But for those who are truly rich, they are concerned about two things. First, how do they grow their wealth and second, how do they ensure this wealth is passed on to the next generation. With that in mind, here are some tips on how to build and protect wealth for your family.
1. You need a plan
Creating and protecting generational wealth does not happen on hopes and dreams alone, you need a plan in place if you want to make sure your money is protected. The reasons are simple – you need to prepare for estate tax liabilities, professional fees, economic downturns, and even heirs who might not be prepared for a financial windfall. As such, the plan isn’t just for how you will build your wealth it should consider the needs of your family long after you are gone.
Another thing to keep in mind is that the “experts” you bring on to help you with your plan should have experience with the size of your portfolio. If you are a centimillionaire it will do you no good to retain a financial planner who only works with IRAs and the inverse is true for us mere mortals.
So, get the support you need from people who truly understand your situation and have worked with others in the same boat as you. This will pay dividends in the long run as you will have a plan which is right-sized for your needs.
2. Knowledge is wealth
While the continued increase in the cost of higher education has begun to eat into the return on an investment in education, it does hold true that those with a skill or an advanced degree tend to have more earning power than others. As such, part of your plan should be to ensure that your family can afford an education without having to go into debt.
This is important as it means that your family’s earning power will be less likely to diminish over time. The result of this is that the wealth you have created not only can be sustained for generations but might even grow – as such, your money might be able to live on for many decades after your passing.
Another part of the education process is to teach your children about the value of money. In this way, they will not only be able to make proper decisions about their money but will also be able to take control of their investments in the future.
You can’t truly be rich if you don’t own property. Think about it, real wealth starts with owning the land you live on then expanding from there. As such, one of the keys to building and protecting wealth for your family is to invest in property.
While this starts with paying off the mortgage in your primary home, it could also mean extending your investments into rental properties and even in Wyoming land. The latter might be part of a land banking strategy for you and your family or it could be investments in working farm and ranch land – something which often delivers better returns that operating these businesses.
4. The precious
Metals and stones that is. Granted, gold prices have remained below the peaks reached in the summer of 2011. But if you take a long-term view then an investment in gold in the early ‘90s has more than tripled in value and this is a big reason why many people see gold as an integral part of their investment strategy.
One thing to keep in mind when investing in gold is that you probably don’t want to invest in coins. The reason is simple, the price of the coins often includes the labor to make the coins. The same goes for jewelry, though you might have a few gold pieces in your collection.
Another thing to keep in mind when investing in gold (or silver) is the purity of the metal. For example, 18k gold is about 75 percent gold and sterling silver is 92.5 percent pure – the rest are metals added to increase hardness and for aesthetics.
Finally, your best bet when buying precious metals or stones is to only accept physical delivery of the bars or stones and not certificates. Sure, you will have to make sure you have a storage facility but by having the actual metal or stones on hand it means that you are less prone to any shock if the company or exchange issuing the certificates runs into trouble. In addition, gold bars are 99.999 percent pure, this means you are buying gold and not a filler metal.