Generational Wealth refers to collecting financial resources and assets passed down from one generation to the next. It is also known as family wealth or legacy wealth.
Generational Wealth includes stock market investments, money, real estate, business and everything else having monetary value.
Family wealth does not always mean financial resources. It can also comprise the skills and values that your children can use to build better lives and create Wealth eventually passed on to your future generations as generational Wealth.
Why Is Generational Wealth Important?
People or families who inherit legacy wealth have financial advantages over those who do not.
The inherited generational Wealth helps build a solid foundation for your future generation’s financial success and helps them build sustainable Wealth over many generations to come.
Generational Wealth gives your descendants a secure future where they can think beyond daily financial needs and plan a successful life.
According to a study centred around wealth transfer, 70% of multi-generational wealth transfers fail to owe to the involuntary loss of control of assets.
A majority of these failures occur due to various reasons such as inadequate preparation of heirs, lack of family mission, breakdown of family communication and trust, etc.
The primary problem with succession planning today is that many families forget that ongoing businesses are not profit-oriented but also focus on various dynamics centring on the respect, trust, traditions and original visions of the company.
One must consider the original business workings and the need for constant innovation and evolution of talent and skills.
Communication across generations is a must where families must achieve the balance between tradition and modernity.
Let’s take a look a the various ways that help to build a successful generational wealth.
- Invest In The Stock Market
The stock market is an excellent channel for building Wealth over a long period. Building generation wealth via investing in stock markets is a perfect option as it can grow for decades.
Investing in low-cost index funds is a brilliant way of beginning your stock market investments. These funds are a suitable choice as they can offer low fees and long-term growth.
One must focus on investing in long-term investments and watch them grow in value.
- Invest In Real Estate
Real estate investments offer a steady cash flow and increase property values over time, offering a reliable path to Wealth. Buying properties will grow your real estate portfolio, and the property value too will increase over time.
Singapore’s property and rental tax laws are progressive, making it a tax haven and investing in real estate results in an ongoing cash flow along with creating substantial Wealth for future generations.
- Build A Business To Pass Down
Family businesses continue to dominate Singapore’s advanced and prosperous economy and form an essential generational wealth asset. Almost all family businesses in Singapore are passed down to future generations, which is why you need to build a solid business for your future beneficiaries.
For ensuring a successful business across generations, you must include your children in the business from a young age. They must clearly understand the business operations and prepare themselves for their future role.
- Save Money Strategically
The most straightforward way to build generational Wealth involves saving strategically. After accumulating money from your various investments, you must put them in a tax-advantaged savings account where it continues to grow.
- Take Advantage Of Life Insurance
Global Data states that Life Insurance Industry is expected to reach S$43.5bn by 2024!
Life insurance offers protection to your family in the event of your untimely death. Without substantial income, your child might have to face difficult financial situations.
Investing in life insurance helps you protect your future generation from unforeseen financial tragedies.
- Invest In Your Child’s Education
Education provides the best way for your children and future generations to support themselves. By investing in your child’s education, you help them set up for a brighter and debt-free future.
Wealth Transfer Singapore: Lighthouse Legacy Planners
A successful generational wealth transfer requires a robust legal structure, ring-fencing risks and ensuring that all family members are well-protected. Families must have regular reviews of structures and family agreements to ensure that they are updated and relevant to the dynamic changes within families.
Legacy Lighthouse Planners help families accomplish their vision of successful wealth transfer in Singapore.
Our various consultation services like workshops, seminars, consultations, and onboarding help families create a solid generational wealth transfer plan that ensures financial stability across multiple generations.