By Travis Smith on February 24, 2022

How to Build Generational Wealth from the Ground Up: 5 Essential Steps

Every parent wants to give their children the very best start in life. For many people, it goes further than just their own children. They want to build wealth and set up a success system for their children’s children and beyond. 

You’ve probably heard the term “old money” before. When we think of “old money,” we think of country clubs and mansions: Things that are out of reach for all but the richest of the rich. But “old money” is just generational wealth, and we’re here to show you that generational wealth is attainable for anyone if they make the right moves and invest how the wealthiest invest.

This post will go through the five essential steps for getting started building generational wealth. 

 

What is Generational Wealth? 

Generational wealth is any wealth that is passed down from one generation to the next. In this context, wealth refers to any assets you may own. These assets can include cash, stocks, real estate, family businesses, and other things of value like jewelry or fine art.

Related: Paul quits his corporate job to pursue real estate lending

But in this discussion of building generational wealth, we aren’t just talking about passing on a small bank account and a few family heirlooms. Most people interested in building generational wealth are passionate about creating a future in which their children can live their lives free of financial worries. That goal may sound unattainable, but by taking the right steps, you can bring yourself closer to it each day.

Tribevest’s mission is to make investing and building wealth accessible to everyone. Building generational wealth is one of the most common goals of Tribevest tribes, so you’re in good company! Our platform makes it easy to pool capital with friends or family to invest in high-value assets that you can pass along to the next generation. But before we get there, let’s go through the top five steps you should take to get started building generational wealth.

 

1. Find a Mentor

Luke Skywalker had Obi-Wan Kenobi, Spider-Man had Iron Man: To reach your generational-wealth-building goals, you’ll need to find a mentor of your own. 

When we say you need a mentor, we don’t mean a famous speaker or author. Though books and YouTube channels can be informative and inspiring, you’ll want to find a mentor you can speak to one-on-one to gain real guidance and coaching on your journey.

If you have someone in your social circle who has already built the type of wealth you aspire to reach, you may already have a mentor in mind. You may have to get a bit more creative in your approach if you don’t already have a mentor built into your social network. 

Check out online (or local) communities and comment boards on your favorite wealth-minded podcasts or channels. Below we’ll include a list of some good places to start looking!

The Flipstress

Cash Flow Diary

Black Business.Com

Thanks For Visiting

BnB Mastery

Black Financial Literacy Store

Once you have a mentor in place, your next step is to take a look at your social circle. Do you have friends with similar wealth-building goals to yours? If not, you may want to widen your circle to make room for friends who are ready to level up and build generational wealth.

 

2. Diversify Your Investments

Stocks and bonds aren’t enough if you want to build generational wealth. That doesn’t mean you should ignore them altogether, but you should only put about 50% of your investable capital toward public investments like stocks. 

To build true wealth, you’ll need to pursue private, alternative investments as well. What are alternative investments? Alternative investments are any investments that aren’t stocks, bonds, or cash. A few examples of alternative investments include real estate, business ventures, collectibles, and cryptocurrency. 

The benefit of diversifying your investment portfolio with alternative assets is that the success of your portfolio doesn’t depend on the health of the stock market. Alternative investments also tend to be less volatile than the stock market and can offer higher returns over time due to compounding interest and other factors. 

If you invest in the right alternative assets, you can even pass those assets down to the next generation, helping to build generational wealth that way. 

Still not sure where to start with alternative investments? Check with your new social circle! See where people at a similar experience and capital level to you are putting their investment dollars. You don’t have to follow the pack, but you may find yourself inspired to invest in amazing assets you had never considered before. 

 

3. Start Small and Learn

Starting your journey toward building generational wealth can feel overwhelming, but there’s a simple solution: Don’t be afraid to start small.

Not ready to dive in and be an angel investor for a start-up? Check out sites like WeFunder or SeedInvest and help crowd-fund a small business. Are you intimidated by the idea of being a landlord for a long-term rental property? Start by buying a vacation property with friends and renting it out on weekends no one is using it. 

Experience is one of the best teachers when it comes to investing, but that doesn’t mean you have to burn a ton of cash in the process. If you feel like you need time to get your feet wet, it’s best to start small! You’ll build momentum—and generational wealth—one step at a time. 

 

4. Get There Faster With Friends 

You can pool your capital with friends or family to kickstart your learning process and level up to investment classes you can’t afford on your own. Investing with a group spreads the risk associated with your investments. 

Additionally, it may free you up to diversify your investments more quickly: Instead of investing one big chunk of your capital into a single real estate investment, you can divide that chunk between multiple endeavors and invest in all of the assets together as a group. 

Related Read: Buying Property with Friends: 4 Steps to Build Massive Wealth

Purchasing real estate or investing in start-ups with your siblings, children, or parents can help you provide a consistent alternative income source across generations. Investing together is more effective than simply passing down the asset in a will. Why?

It’s like the adage says about the difference between giving a man a fish and teaching him to fish: One of the biggest things you want to pass along when building generational wealth is knowledge

When you pass on the knowledge of how to invest effectively, you’re building more than just a nest egg for your children and grandchildren: You’re building a legacy of wealth-building that your family can pass on from generation to generation. 

 

5. Become a Mentor

The last step in how to build generational wealth brings us full circle. You started your journey by seeking out a mentor. Now it’s time to become a mentor for a new, young investor trying to build their own path toward generational wealth!

 

Start Building Generational Wealth Today

If you’re interested in building generational wealth and a legacy of financial security for yourself and your family, there’s no time like the present to get started. Start by assessing your current financial situation and establishing how much capital you have to invest. Then, you’ll be ready to start your investment journey. One of the best ways to build wealth is alternative investments, and one of the best ways to build generational wealth is to invest in those alternative assets with family.

Tribevest’s platform is built for people looking to build generational wealth and gain financial freedom. We can help you align your tribe, pool your capital, and get started in your next investing endeavor—all while taking care of the paperwork and logistics for you. Build your tribe today to get started!

Published by Travis Smith February 24, 2022