Accumulating generational wealth is a lifelong pursuit, but the benefits can help set your future generations up for financial success. And if you’re starting with just $100,000, getting to millions can feel like an impossible feat.
But steady investments and patience can get you there, along with some investing knowhow. There are a few tried-and-true ways to build generational wealth that can help you retire with dignity, and leave a tidy sum to your family.
To get the details on how to do it best, we’ve asked the experts how they would handle $100K to build lifelong generational wealth. Here are their strategies.
Invest in the Stock Market
Investing in the stock market might seem like a boring way to build wealth — but tell that to Warren Buffett. The truth is, many fortunes have been built in the stock market, and it continues to be a great place to build long-term wealth. Our experts agree.
Andre Disselkamp, personal finance expert and co-founder of Insurancy, is a fan of stock investing diversification. “Investing in a broad mix of stocks is another potent way to build wealth,” said Disselkamp. “With the $100K, you could invest in a variety of companies across different sectors and regions, mitigating risk while capitalizing on global economic growth.”
He’s also an advocate for passive investing through ETFs and other funds. “For a more hands-off approach, consider investing in low-cost, diversified mutual funds or Exchange Traded Funds (ETFs),” he said. “These funds pool money from many investors to invest in a range of assets, such as stocks or bonds, and are managed by professional fund managers.”
Khwan Hathai, CFP and Certified Financial Therapist at Epiphany Financial Therapy, casts her vote for index fund investing. “These funds, by tracking specific market indexes, provide a straightforward, low-cost way to establish a diversified investment portfolio,” said Hathai. “Their passive management approach typically yields lower expense ratios than actively managed funds, making them an easy and cost-effective asset to manage and bequeath to successors. With the power of compound interest, these funds can generate substantial growth over an extended period, offering significant financial benefits for future generations.”
Invest in Real Estate
Real estate is one of the best asset classes around, with a history of helping homeowners grow their net worth through appreciation and retinal income. If you have $100,000, you’re in a good position to become a real estate investor. Here’s how our experts see this investment opportunity.
James Allen, CFP and founder of Billpin, likes the idea of rental real estate. “Real estate is a tangible asset that can generate steady cash flow and appreciate over time,” he said. “With $100K, you could potentially leverage it as a down payment for a property worth much more. The rental income can help pay the mortgage and even result in profit. Plus, real estate offers tax advantages and personal use.”
Hathia also likes this asset for growing generational wealth. “This asset class offers two-fold benefits. Firstly, [it generates] a steady cash flow through rental income, which notably keeps pace with inflation, thereby safeguarding your earning potential. Secondly, real estate has a historical tendency to appreciate over time, providing potential capital gains. The tangibility of real estate also allows for it to be passed onto future generations, promising them a measure of financial security.”
Start a Business
In addition to investing, starting a business is one of the best ways to build wealth over your lifetime. With the ability to create and grow something that you 100% own, you can build wealth not only for yourself, but create a business that you can bring your family into eventually.
Jessica Carrell, co-founder of Any Software Tools and a business owner herself, thinks that starting a business has a large upside. “Consider using your $100k to start your own business or invest in startups,” said Carrell. “While this option carries more risk, it also offers the potential for significant returns. Look for promising industries or disruptive technologies that align with your interests and skillset.
Disselkamp is a fan of family-owned businesses. “If entrepreneurial spirit runs in your veins, using your $100k to start a family business could pay off substantially,” he said. “A successful business can provide income, become an asset to pass on, and serve as a family legacy.”
Kamyar K.S., CEO of World Consulting Group, recommends another approach to business. “Buying a business is also an option,” said Kamyar. “As an entrepreneur you are investing in yourself and the sky can be the limit if you work and put the time in. Earning money in an online business can work for anyone particularly people who have grit and determination. Start up costs can be low for some opportunities and may be a springboard into real success.”
Invest in Yourself
Ultimately, you are in charge of your money, and if you want to build generational wealth, you need to invest in yourself. This doesn’t just mean money, but time and education too.
Carrell says to focus on financial education and skills. “Invest in your knowledge and skills,” said Carrell. “Take courses, attend seminars, or hire a mentor who can guide you in making wise investment decisions. The more you learn about different investment strategies and financial planning, the better equipped you’ll be to build wealth over the long term.”
Huzaifa Ghayas, head of marketing at Money Genius Tips, thinks that education and skill development are crucial for building wealth. “Putting money toward your education and professional growth can help you and your family have a comfortable financial future. A solid financial footing for future generations can be established by investing in one’s own personal development through the acquisition of marketable talents. Individuals who invest in themselves by acquiring advanced degrees or specialized training have the tools they need to become leaders in their fields. This can pave the way to more lucrative employment or business opportunities, increasing your prospective earnings.”
In addition to investing in your own education and skills, investing in your kid’s education can have a major impact as well. “Making sure your kids go to a good school and helping them succeed in their studies can help them reach their full potential and put them on the path to a comfortable future,” said Ghayas. “You may ensure that your family’s wealth will be passed down from generation to generation by encouraging a culture of lifelong learning and adaptation in its members.”
Generational wealth is attainable, but it requires patience, perseverance and a long investing time horizon. Consistent investing multiplied by decades can turn $100,000 into millions of dollars, which can be passed onto future generations.
There are multiple paths to generational wealth, but it’s up to you to instill the knowledge of how to handle that money to keep the wealth in your family for generations to come.
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