Building generational wealth is a long-term financial goal that requires planning and strategic investments. It is a way to secure a family’s financial future for generations to come by leveraging financial resources and making investments that increase in value over time.

At its core, generational wealth is about creating a financial legacy that can be passed down from one generation to the next.

For instance, the Rockefeller family is one of the most well-known examples of generational wealth. The family patriarch, John D. Rockefeller, made his fortune in the oil industry in the late 19th and early 20th centuries. He built a business empire that became one of the most successful and profitable in American history. Today, the family’s net worth is estimated to be around $11 billion.

Also, Warren Buffet is one of the most successful investors of all time, and his investment strategy has helped his family build generational wealth. Buffet’s Berkshire Hathaway holding company has grown into one of the largest and most profitable corporations in the world. Today, his net worth is estimated to be around $96 billion.

Statistics show that building generational wealth is not something that happens overnight. According to a study by the US Federal Reserve, the median net worth for households headed by someone under 35 is just $11,100. By contrast, the median net worth for households headed by someone over 65 is $264,800.

How to Build Generational Wealth

1. Choose the right investment

One of the key factors in building generational wealth is choosing the right investments. In general, investments that increase in value over time, such as stocks and real estate, are more likely to help families build long-term wealth than investments that provide short-term gains.

2. Minimize Debt

High levels of debt can make it difficult to save and invest for the future. By paying off debt and avoiding new debt, families can free up more of their resources for long-term investments and savings.

3. Decide to invest in real estate

Owning rental properties can provide passive income for decades to come. For instance, the founder of McDonald’s, Ray Kroc, invested in real estate that was leased to McDonald’s franchises. His foresight allowed his family to generate significant wealth and become landlords for generations to come.

4. Create Trust Fund

A trust fund is an investment account managed by a trustee that holds assets for the benefit of beneficiaries and is typically set up for children or grandchildren. This investment account can include stocks, bonds, and other investments that can grow and compound over time.

5. Invest in Education

Education helps people acquire knowledge, skills, and income that can be passed on to future generations. According to the US Bureau of Labor Statistics, individuals with some college education earn roughly 20% more than those without any college education; those with a bachelor’s degree earn about 60% more.

Building generational wealth takes time, commitment, and financial planning. It starts by setting financial goals and developing a long-term plan that considers the family’s current and future needs. Investing in real estate, creating trust funds, and seeking education are all examples of tools that families can use to start building generational wealth. By taking these steps, families can provide financial stability for future generations.