6 Moves People Make That Holds Them Back From Generational Wealth

Building generational wealth is something anyone can do. However there are certain money moves that people make that can prevent them from accumulating wealth much more to think of transferring wealth.

Here are some of the biggest ones.

• Waiting for the right time to invest, waiting until they have money.

Many people keep waiting for a longtime to begin investing or don’t invest at all sighting reasons like fear of risk or lack of investing knowledge.

While many others wait to get started until they have what they consider to be enough money. This is a big mistake as it limits potential returns.

It potential deprives you of compounding interest and the magic of time, which are the two primary agents for wealth creation.

Taking on high risk investments in the hope of accumulating wealth quickly is one sure way of losing it all. While this may occasional work out well, the probability of a loss is more.

• Taking on risky investment.

Choose investments that align with your goals, situation and risk tolerance. For long term investment you hope to pass on to the next generation, the best investments are likely to be mostly long-term low risk portfolio diversified into various asset classes.

• Never buying property.

Real estate has long been considered a smart investment opportunity especially for those who are looking for something to pass down to their heirs.

Not buying property is one of the biggest obstacles in building generational wealth which will benefit future generations by either providing them a place to live or a large chunk of money if they decide to sell.

• Failing to create a trust.

Another mistake that can delay or even hinder the transfer of wealth is failing to put those properties and assets into a trust.

The main benefit of putting your home in a trust is to bypass probate when you are no more living.

• Earning more but also spending more.

As people start earning more money, they often start spending more. As income increases, so increases expenses. This is what is known as lifestyle inflation and when it persists it can make it difficult to build lasting or generational wealth.

To avoid lifestyle inflation, try reinvesting majority of any raises or bonuses you get. Try also to spend less than you earn, saving and investing the difference will prevent lifestyle inflation. Money invested will grow over time.

• Relying on debts to sustain their life styles.

While there is such a thing as good debs, far too many people become reliant on debts to fund their lifestyle, they more debts you have, they more you are likely to be paying interest.

Whereas any interest payments could be going towards building wealth. Consumer debts make it difficult to save and invest because of the high interest payments associated with this debts,

If you carry any form of consumer debts, you may need to pay them off first before you can build generational wealth.

Takeaway

Building generational wealth is a choice, but it’s one decision you can make today that will have a positive impact on your heirs for generations to come.

They way to build generational weight is to avoid all the above reasons above and with discipline, generational can be achieved.