Generational wealth. It’s a term that gets thrown around a lot these days—and for good reason. With the average American household worth more than $200,000, and nearly 90% of U.S. families having some form of retirement savings, it’s a topic that’s on everyone’s mind.
But what does generational wealth actually mean? And how do you achieve it?
What Is Generational Wealth?
Generational wealth is the idea that you can pass your vast fortune down through the generations to help ensure financial security in the future. This means you’re investing money now so that your children and grandchildren will have enough money to live off of later in life—and hopefully even pass along to their own kids (and so on).
The problem is that many people don’t realize this concept exists—or how to go about achieving it. The first step is understanding how generational wealth differs from other types of investment:
Generational wealth requires long-term investments with a high expected return over time. Traditional investments like savings accounts or CDs can help build up your wealth over time by earning interest, but they aren’t designed to grow exponentially like stocks or bonds tend to do over time.