Finance and wealth creation are probably the most talked about in the 21st century. However, many people are still in poverty. According to the world bank, 689 million or 9.2% of the global population live in extreme poverty. On the other hand, more than 34 million people live in extreme poverty or 10.5% of the United States population. Here are some factors that make people poor. It could be that the person was born in a low-income family or lacks information.
It could seem impossible to become wealthy if you were born into a low-income family. However, I can assure you that most millionaires are self-made. This means that anyone can become financially free as long as they are willing to learn and put in the time. But to be rich, you must have a good understanding of the difference between being rich and wealthy.
What is the difference between rich and wealthy?
Rich: Being rich has to do with showing off your money. Rich people buy flashy cars, expensive houses, jewelry, and more things that make them look well off financially in people’s eyes.
Most rich people fell in the middle-class category. The middle class or the rich are usually the big spenders. They can buy anything trending on the market to show their friends and family that they have a lot of money. Another sign of a rich person is that they care more about the job titles than the salary.
Wealthy: This group of people lived frugal life until they had enough sources of income that will generate the money for generations. Generational wealth is an asset that will generate money from generation to generation. People who own generation income assets are usually in the top 1%. Wealthy people typically are not about showing off their money because they have nothing to prove. You know if someone is wealthy if they have different passive income sources, have more money than they need, and their net worth is positive. Wealthy people love to own assets that generate an income passively. This article will discuss 11 investments that anyone can start to create generational wealth.
1. Land
The one thing that human beings agree on is that we have limited land. As we all know, 25% of the earth’s is land and the other 75% is water. This statement alone makes the land scarcer and more attractive to long-term investors. According to USDA NASS, “The United States cropland value averaged $4,420 per acre, an increase of $320 acre (7.8percent) from the previous year” Also, according to the United States pasture, the land saw an increase of $80 or $5.7 per acre.
Land can be a very good asset to buy and hold to create generational wealth, especially since the land business doesn’t go out of style. The other good thing about owning lands in your asset’s portfolio is that it is not easy to sell. This means that if you have greedy children, they will not be able to sell them quickly. A Land business is boring and hard to sell. That alone should be why a person should hold some lands to create a generation of wealth.
2. Commercial properties
Owning commercial buildings can be a profitable investment in your generational wealth portfolio. Commercial buildings include:
Events venues.
Large-scale apartment complex.
Office buildings.
Other commercial property ideas.
The commercial property business is very profitable because it brings two types of income at once.
The first passive income is from rental properties. The money that people or businesses pay the building owner to rent a space, or a room is considered a passive income. The passive rental income will keep coming in for generations to come as long as there is a tenant in them.
The second income is the capital gain: It is the second income that the property owner makes when commercial property appreciate in price. Capital. So, the amount the property goes up in value is a capital gain income. Capital gain can be owned in many different investments. So, make sure you read to the end to find out those investments.
The most valuable thing about owning commercial assets is that you can borrow money against them and use them as collateral instead of selling your assets for cash. wealthy people and companies understand this game very well because it doesn't make sense why somebody should sell their assets if they can borrow against them and keep the property. Also, wealthy people understands that IRS doesn't tax borrowed money. Which could be another reason why they borrow cash from the bank instead of selling and pay taxes on the profit.
3. Online Real Estate
A real estate business can be tough to maintain since it requires a person’s presents. However, people who don’t have time or a lot of money can invest in online real estate. You can buy real estate through many companies and enjoy dividends and capital gains. The most popular online broker where you can buy homes or apartments is Fundrise.
Once you invest in real estate through companies like Fundrise, you don’t have to do anything from buying to maintenance. After you open an account, choose how much you want to invest, and the location you want to invest in, Fundrise takes care of the rest. In the return, you get at least 9% in dividends. Then if you choose to invest in a place where the real estate market is going up, you will enjoy the capital gain too.
Investing in online real estate can be great for those who want to create generational wealth, but don't want to deal with the hustles that comes from owning a physical real east house or apartment. Fundrise gives a small window of time every year to those who wish to sell. Once that window is closed, the investor might not be able to withdraw the funds. If they let you get the money, you might be penalized for withdrawing it outside the timeline. Also, you have to keep in mind that you can also get penalties if you request from REIT or Fundrise money that you invested for less than five years.
The Stock market can be another way to invest in real estate without doing anything other than coming up with the initial investment. Real estate Stock companies tend to pay more than 9% in the Quarterly dividends. Owning some REIT stocks can be very profitable in the long run. Individual stocks can be risky. However, if you do not like the hustle of picking the right real estate stocks, invest in the real east ETF to minimize the risks.
4. Start a Business
I am sure you have heard MacDonald’s, Walmart, Adidas, Benz, Bloomberg L.P, Boeing, Bugatti, Ford, Hilton Hotels, Pfizer, etc... Those companies I listed was named after real people. They started small, and now they are massive and well known.
Starting a business can be one of the fastest ways to achieve the wealthy status. If the company becomes successful, you can easily use some of the profits to build other income streams. A Business can be very profitable if you execute it right. It is highly recommended to start a business if you can.
For Instance, Jeff Bezos started Amazon on July 15th, 1994, which was less than 30 years at the time of the writing of this article. Back then, he wasn’t super-rich. But less than three decades after starting his Amazon empire, Jeff Bezos became the wealthiest man in the world. At this point, his family is set for generations to come. The moral of this story is that if you start a business right now, it can be at least a multimillion-dollar company in less than three decades. It might not be as big or profitable as amazon, but you will have at least something to pass on to children and their children.
Dividend-paying stocks can be another way to create income that can last for generations. It can be tough to choose from individual stocks because the dividend payout rate and frequency are different for each stock. So, choose wisely before you invest your hard-earned money because you don’t want to be in the dividend trap.
Dividend Traps are the companies that pay a high dividend yield but not doing well financially. Most of the time, dividend traps companies tend to lose value in the long run, which can alarm that the company cannot sustain the dividend payout for long.
The best way to avoid the dividend trap companies is to invest in the ETF (Exchange Traded Fund). ETF track several companies from a specific industry. They invest in the top companies of whatever industry you might be interested in. My favorite ETF stock is the S&P500.
S&P500 (Ticker symbol SPY) exposes investors to the 500 best companies in the United States. Investing in the S&P500 is the same as investing in the United States economy. According to the United States Stock market, the S&P500 grew by 8% yearly. It might not sound like a lot, but those who understand how the compound interest work know the impact 8% in the long run.
Cryptocurrency is decentralized digital money that runs on the blockchain. At the moment, Bitcoin is considered the godfather of all cryptocurrencies. Buying in bitcoin is like purchasing a digital gold. Crypto projects come in many different forms. Some have case use, and others are just assets you can hold, hoping to make money in the future.
Cryptocurrency is still in its infancy stages, making it very volatile and risky if you are looking for a short-term gain. Make sure you do more research or seek for professional help before buying a digital currency.
At Bako Invest, Bitcoin, Ethereum, Cardano, Litecoin, Solana, Polygon, and Cronos are among the list of crypto projects we admire the most. You can buy cryptocurrency on crypto wallets or cryptocurrency exchanges.
NFT Stands for Non-Fungible Token. According to Forbes, “NFT is generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum” NFT investment became popular during the 2020 Covid-19 quarantine. In the pandemic, new classes of investment like NFTs and cryptocurrency saw a significant surge in their prices since people were looking for ways to make money.
NFT is like art. The difference is that NFT is stored digitally on the blockchain, which means that no one can fabricate your NFT. For those who understand the art business, you know how fast art can go up in price. So, if you buy NFT to create generation wealth, your digital art can be worth a lot down the road.
Related article: What Is NFT And How to Invest in It
8. Invest in the Metaverse
The new kid on the block is the metaverse projects. According to Polygon.com, “In the broadest terms, the metaverse is understood as a graphically rich virtual space, with some degree of verisimilitude, where people can work, Place, Shop, and Socialize” Investing in the metaverse can be an excellent investment for generational wealth creation. The younger generations are adopting the metaverse business fast. Investing in the metaverse right now is like investing in the internet in the early 2000s.
Related article: What is Metaverse and How to Invest in It
9. Gold and Silver
Gold and silver are still among the best investments that anyone can own to hedge against inflation. When people mention gold as an investment in the 21st century, people tend to push back a little because they think gold and silver are past investments. They might not make someone a millionaire overnight like cryptocurrency and NFTs. But they are still one of the best investments to have in the generation wealth portfolio.
10. Create an ever-green information product
An information product is one of the best investments that people usually don’t talk about when they are thinking about generational wealth. For those who don’t know what an information product is, it can be a digital course, eBook, or other knowledge you might want to share digitally. This kind of source of revenue requires time and money in the beginning. However, once your information product is uploaded to the internet, it can generate cash for as long as the information you are providing is helpful to people.
11. Life insurance
Life Insurance is a contract between the individual (policyholder) and the insurer where the insurer promises to pay a certain amount of money to the family members in the event of the death of the person who bought the life insurance policy.
Life insurance benefits can start before the policyholder’s death in case of a critical or terminal illness, depending on the contract agreement on between the policy holder and the insurer company.
Benefits of having a life insurance
You will leave a lot of of money to your family from the life insurance company.
Your family will not need to sell everything you have worked so hard for the burial costs.
Your family can use the leftover (after the burial costs) to start another source of income.
Your family will never forget you as a person who thought about them even before the death.
Since you got to the end of the article, here is a bonus tip for you.
Teach your Children about Finance
Creating a generation of wealth is not as easy as it sounds. The person who starts the ball rolling knows what they are doing, and their heart is always in the right place. People who begin creating generation wealth think about their kids, grandkids, and the generations after that.
Teaching the children about personal finance is crucial. According to Nasdaq, 70% of families lose their wealth in the 2nd generation. So, it is better to teach the kids about personal finance and how to keep the money while they are still young and trainable. It is easy to make money but hard to keep it.
Related Article: 10 things to avoid at young age to become successful
In conclusion
Generational wealth is the only factor that separates the wealth and the rich. Being rich usually means that the person buys many unnecessary things to show off to the family and friends. The rich are generally in much debt because they always in the competition with people who they don't even know.
On the other hand, the wealth is usually in the top 1% and most likely not to have any debts, and if they do, it’ll be a good debt such as a business or investment loans. The biggest thing that separates the rich from the wealthy is that the rich care more about their public appearance. In contrast, wealthy people care about how many sources of income they have. You should to!
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