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12 Proven Ways to Build Generational Wealth (Like the Wealthy Do)

We all want the best for our families and their futures. To help ensure them of financial wellness, here are 12 ways to build generational wealth.

By Adam Palasciano

Edited by Eric McWhinnie

Updated Dec. 17, 2024

Building generational wealth involves making strategic financial decisions that extend beyond individual prosperity, aiming to provide enduring benefits for your family over multiple generations.

From managing debt wisely to crafting long-term investment strategies, there are various ways to establish a foundation for sustained financial success.

Here are 12 impactful ways to build wealth, offering insights and actionable steps to help you create a lasting legacy for your family's financial well-being.

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Avoid high-interest debt

One of the foundational pillars of building generational wealth is steering clear of high-interest debt. Accumulating debt with exorbitant interest rates can impede financial progress and limit your ability to invest in assets that contribute to long-term wealth creation.

Crushing high-interest debts and adopting responsible borrowing practices will help ensure that financial resources are channeled into wealth-building avenues rather than servicing debt.

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Invest for the long run

Building generational wealth requires a perspective that extends beyond short-term gains. Embrace a long-term investment strategy, leveraging the power of compounding to grow your wealth steadily over time.

Consider investing in a diversified portfolio of assets, such as stocks, bonds, and mutual funds, with a focus on long-term growth. Consistent and disciplined investing contributes to the accumulation of wealth that can be passed down through generations.

Hire an accountant

Navigating complex financial landscapes necessitates professional expertise. Hiring an accountant helps you maximize tax advantages and identify strategic financial opportunities.

An accountant can offer valuable insights into optimizing your financial structure, minimizing tax liabilities, and aligning your financial strategies with generational wealth objectives.

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Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.

Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.

Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.¹ This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice. To get stock reward, new customers need to sign up, get approved, and link their bank account. Stock rewards shares cannot be sold until 3 trading days after the reward is granted and the cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at <a href="https://robinhood.com/us/en/support/articles/open-account-pick-your-stock/">rbnhd.co/freestock</a>. Fractional shares are illiquid outside of Robinhood and are not transferable. Not all securities available through Robinhood are eligible for fractional share orders. For a complete explanation of conditions, restrictions and limitations associated with fractional shares, see the Fractional Shares section of our Customer Agreement. Robinhood Gold is offered through Robinhood Financial LLC and is a membership offering premium services available for a fee.

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY² Annual Percentage Yield. Rate valid as of April 12, 2024. To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time. Fees may reduce interest earnings. on your uninvested cash³ Interest is earned on uninvested cash swept from your brokerage account to partner banks. Partner banks pay interest on your swept cash, minus any fees paid to Robinhood. As of Nov 15, 2023, the Annual Percentage Yield (APY) that you will receive is 1.5%, or 5% for Gold customers. The APY might change at any time at the partner banks' or Robinhood's discretion. Additionally, any fees Robinhood receives may vary and are subject to change. Neither Robinhood Financial LLC nor any of its affiliates are banks. All investments involve risk and loss of principal is possible. Robinhood Financial LLC (member SIPC), is a registered broker dealer. and the ability to buy and sell stocks 24 hours a day, 5 days a week.

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Hire an estate planner

Crafting a comprehensive estate plan is pivotal in preserving and transferring wealth to future generations. Hire an estate planner to assist in structuring your assets, establishing trusts, and developing a clear succession plan.

A well-crafted estate plan not only safeguards your wealth but also facilitates a seamless transfer of assets, minimizing potential challenges and ensuring that your family's financial legacy endures.

Educate your family about money

Financial literacy is a powerful tool in building generational wealth. Actively engage in educating your family members about money management, investments, and financial responsibility.

Foster an open dialogue about financial goals, strategies, and the principles of wealth creation. By instilling financial literacy in successive generations, you empower your family to make informed decisions that contribute to the ongoing growth and preservation of wealth.

Start a successful business

Entrepreneurship can be a potent vehicle for building generational wealth. Consider starting a successful business, leveraging your skills, passions, and market opportunities.

A thriving business represents a valuable asset that can be passed down to future generations. Strategic business ownership contributes to a diversified wealth portfolio and establishes a legacy of enterprise for your family.

Grow Your $$: 11 brilliant ways to build wealth after 40

Diversify your assets

Diversification is a fundamental principle in wealth management. Spread your assets across various investment classes to mitigate risk and optimize returns.

Explore diverse investment opportunities, including stocks, bonds, real estate, and alternative investments. Diversification helps protect your wealth from market fluctuations and positions your family for sustained financial growth across different economic environments.

Invest in real estate

Real estate investment has long been heralded as a pathway to generational wealth. Acquiring income-generating properties and strategically investing in real estate can provide a consistent revenue stream while building equity over time.

Real estate assets, whether residential or commercial, may offer financial stability and the potential for substantial appreciation, contributing to long-term wealth preservation for future generations.

Create and maintain a trust

Establishing a trust is a strategic legal tool for generational wealth planning. A trust allows you to specify how your assets will be managed and distributed over time, providing a structured framework for wealth transfer.

By creating and maintaining a trust, you can exert greater control over the destiny of your assets, ensuring they are safeguarded and distributed according to your wishes.

Earn up to a $300 bonus and grow your money with up to 4.00% APY

This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 4.00% APY.⁴ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at <a href="http://sofi.com/banking">sofi.com/banking</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Direct Deposit can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.00% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a>

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SoFi has no account or overdraft fees⁵ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage. and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.⁶ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at <a href="http://sofi.com/legal/banking-fees/">sofi.com/legal/banking-fees/</a> ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a> Plus, you can receive your paycheck up to 2 days early.⁸ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.

SoFi is a Member, FDIC. ⁷ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a>

Open your SoFi account and set up direct deposit

Prioritize education investments

Investing in education lays the groundwork for future financial success. Prioritize funding educational opportunities for your family members, whether through college savings plans, scholarships, or other educational investments.

Education equips successive generations with the knowledge and skills necessary to navigate the complexities of the modern economy, fostering a legacy of informed decision-making and professional achievement.

Implement philanthropy

Incorporating philanthropy into your wealth-building strategy not only benefits society but also instills a sense of purpose and responsibility in your family. Establish a family foundation or engage in philanthropic activities that align with your values.

Philanthropy creates a positive impact on the community and fosters a culture of giving within your family, reinforcing the importance of social responsibility in the generational wealth-building process.

Utilize life insurance strategically

Strategic use of life insurance can enhance your generational wealth plan. Beyond providing a financial safety net, certain life insurance policies offer investment components that accumulate cash value over time.

By leveraging life insurance strategically, you can create a source of liquidity for future generations, contributing to their financial security and providing a tool for estate planning.

Supercharge your investments: See what could happen if you add fine art to your investment portfolio

Bottom line

Building generational wealth requires a multifaceted and disciplined approach. Each decision and strategy contributes to the broader legacy you leave for your family. Consider how these 12 ways can be integrated into your financial plan, aligning with your goals and values.

As you make these money moves, reflect on the impact you wish to have on future generations. Ask yourself: What financial principles and strategies can I implement today to ensure a lasting legacy for my family's prosperity? The answers lie in thoughtful planning, strategic decision-making, and a commitment to fostering enduring financial well-being for generations to come.

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Invest in Paintings by Basquiat, Picasso, Banksy

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