What Is the Definition of Generational Wealth and How Can I Build It?Stocks
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“Generational wealth” is a term that’s thrown around quite frequently these days.
But what is the definition of generational wealth?
And how you can create generational wealth and build it for you and for your family?
Well, let’s start with the easy part: defining generational wealth.
What Is Generational Wealth?
Generational wealth — also called family wealth or multigenerational wealth or legacy wealth — is wealth that is passed down from one generation to another.
Now, generational wealth takes many forms.
It can be in the form of traditions and heirlooms, or even biology and good genes.
But typically, when people talk about generational wealth, they’re talking about financial wealth that can be passed down to the next generation.
How Can I Build Generational Wealth?
You build generational wealth by acquiring generational assets that you can leave to your heirs.
Assets are anything you own that makes money for you rather than take money out of your pocket.
For example, my dividend-paying stocks are generational assets.
Every few months, I get money deposited into my account because I own these assets.
And when I pass away, I can leave these stocks to the next generation, and they will collect dividends as well.
3 Ways Anyone Can Build Generational Wealth With $25-$500
Obviously the richest of the rich leave assets like hotels and businesses to the next generation.
But, thankfully, there are ways that the rest of us can start building generational wealth today with as little as $25.
Check out these 3 ways that anyone can build generational wealth today.
1. Invest in dividend-paying stocks.
We love dividends here at Money Done Right.
When you invest in a dividend-paying stock, you are acquiring a portion of a company that somebody else built and that thousands of other people work for, and they are giving you a portion of their profits. Blows my mind!
There are plenty of great places to open up a stock-investing account, but the one that’s getting us hot and bothered at the moment is Ally Invest.
Ally Invest is great because you can trade dividend stocks for as little as $3.95 per trade compared to $6.95 at E*TRADE and Charles Schwab.
Ally Invest has developed a pretty amazing platform, and no matter if the stock market goes up or done, we still get dividends deposited into our Ally Invest account every quarter!
2. Invest in real estate with as little as $500.
In the old days, you needed a lot of money to invest in real estate.
$500 would not have cut it.
But thanks to advances in technology, real estate investing has become democratized.
Now, if you have $500 or $1,000 in your pocket, you can get started investing in real estate through a platform called Fundrise.
Fundrise is the first private market real estate investing platform.
By combining technology with new federal regulations, Fundrise lets you invest in the once-unattainable world of private investments.
3. Lend out money at 4-6% interest. ($25 Minimum)
Lending out money is one of the oldest ways to earn passive income. It’s essentially renting out your money for either people to use, and the rent you charge is known as the interest rate.
Now, in the old days, if you wanted to lend money to somebody in particular, you were taking on a pretty risky business, unless he or she put up some form of collateral.
But now, thanks to technology, you can spread out the risk by only lending your money in $25 increments.
How does this work? Well, let’s say Borrower A needs a $25,000 loan.
Instead of going to one entity, like a bank or rich person, to borrow the full $25,000 — which would be very risky to that one entity — he or she borrows $25 from 1,000 people.
This scenario presents much less risk because the most any single investor could lose is only $25.
Such an arrangement would have been administratively impossible just 15 years ago.
But thanks to the wonders of the Internet, it is now very possible, and the peer-to-peer lending industry, as it’s known, is thriving for borrowers and investors alike.
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
Trying to learn more about the dividends stocks and what’s the profit with the peer to peer lending what will be my return and the security behind it
Hi Zaki. I personally haven’t had a great experience with peer-to-peer lending and am actually in the process of liquidating my LendingClub account to just invest the proceeds into index funds.
Hey Logan, may I ask what happened. Why was your experience on LendingClub a bad one?
Any chance that a person who, shame, still owes student loans taken put in the 90’s can get ANYTHING forgiven?
Hi Renee. Are these federal or private loans? And about how much is still owed?