What’s the Best Way to Build Generational Wealth?

Generational wealth refers to the accumulation of assets, investments, and property that are passed down from one generation to another. It’s a way of securing the financial future of your family and creating a legacy that can last for generations. Why is generational wealth important? Because building it can provide a sense of financial security, freedom, and independence for your loved ones.

It can also help to reduce financial stress and provide opportunities for future generations to pursue their dreams and passions. In fact, it can help contribute to a stronger sense of family unity, a shared purpose that can bring generations together. Individual family members may possibly gain a sense of pride from working together to build a lasting legacy to benefit generations ahead.

While building generational wealth can be a rewarding experience, it must be done correctly. In other words, there are some common self-sabotaging mistakes to avoid. These include failing to plan, living beyond your means, and taking unnecessary risks. To avoid them, it’s important to start with a clear plan for your finances, live within your means, and seek professional advice when needed. 

It’s important to avoid emotional decisions when it comes to your finances, keeping focused, instead, on your long-term goals, as well. Again, building generational wealth takes time, effort, and dedication. There’s no substitute for any of the three, but the benefits of creating a financial legacy can be significant for both you and your descendants.

As we draw nearer to the second half of 2023, it’s important to remember that the economic weather can change quickly and without warning. Just as we prepare for unpredictable weather patterns, we should also plan for economic turbulence.

Inflation and a bear market ravaged 2022, leaving many people reeling from the impact. The price of goods and services skyrocketed, while the value of some investments plummeted. For those who were not prepared for such a scenario, the consequences were severe. This is what makes it crucial to understand that inflation is not a one-off event. It can happen again, and we should be ready for it.

Meanwhile, we also may see a recession by the end of the year. Although the timing of it isn’t 100% certain, it’s wise to consider the possibility of an earlier arrival now. Recessions can cause a decline in our Gross Domestic Product (GDP), increased unemployment, and decreased consumer spending. Businesses may also struggle while investors suffer possible losses. 

It’s far easier to fight a recession’s effects by strategizing ahead of its arrival rather than to sift through the personal financial damage that can result if you aren’t prepared. It’s also worth noting that even affluent families may lose money without safeguards. Just because someone has money does not mean they are immune to economic downturns. 

In fact, wealthy people have lost their fortunes in recessionary phases due to poor planning or overconfidence in their investment strategies. So, what can we do to plan for the economic weather? Firstly, we should have an emergency fund that can cover at least six months of expenses. 

This fund should be easily accessible in case of a sudden job loss or financial emergency. Secondly, we should have a diversified investment portfolio that is not overly reliant on any one asset class. This can help to mitigate losses during a bear market. Finally, we should regularly review and adjust our financial plan to ensure it aligns with our current goals and the economic climate.

When it comes to growing generational wealth, being intentional is key. The first step is recognizing that standing still isn’t an option. Inflation, taxes, and changing economic conditions mean that if you’re not actively working to grow your wealth, you’re likely losing ground. 

This is especially true for high-net-worth individuals (HNWIs) who have more assets at risk. It’s vital to set clear financial goals and regularly evaluate your progress toward them. Contrary to popular belief, growing a generational wealth nest egg doesn’t require a genius-level IQ or a Wall Street pedigree. In fact, many of the most successful investors are self-taught and made their fortunes through smart, strategic choices.

What sets these investors apart is their ability to make what we refer to as Million-Dollar Choices. These are the decisions that have the potential to significantly impact your wealth, such as choosing the right investment opportunities, minimizing taxes, and managing risk.

Making million-dollar choices don’t require financial expertise or superhuman intuition. However, while you don’t need to be an expert, there is one final ingredient that’s absolutely essential: You have to either reinvest your gains, set them aside as part of your savings, or both. 

For those who aren’t familiar with financial industry terms, let’s define “financial planning” specifically as it applies to the affluent. The fundamentals include:

• Setting clear financial goals. Every journey needs a roadmap. This helps you stay focused on what’s important and avoid making emotional decisions.

• Diversifying your investments. Spreading your money across different assets can help manage risk and, possibly, maximize returns.

• Minimizing taxes. With a higher net worth comes higher tax liabilities. So, it’s important to work with a tax planner to develop strategies for reducing your tax burden.

• Protecting your assets. HNWIs are often targets for lawsuits and other legal actions, so it’s important to have the right insurance and legal protections in place.

• Continuously educating yourself. Wealth management is an ever-evolving endeavor in today’s economy. This makes growing your financial literacy increasingly beneficial.

Wealth Building Includes Tax Planning. Use Our Experience to Plan Against Possible Increases.

For many people, tax season is a stressful time of year that often results in a significant amount of money owed to the IRS. However, by taking proactive steps to trim your tax liability, you can reduce your stress and keep more of your hard-earned money.

First and foremost, it’s important to understand that the IRS doesn’t care if your family prospers. They have a job to do, and that job is collecting as much money as possible. While there are certainly legal ways to reduce your tax liability, the burden is on us to take advantage of them. This means being diligent about tracking expenses, claiming deductions and credits, and making smart financial decisions throughout the year.

One common mistake that many people make is focusing solely on a single year’s tax savings. While it’s certainly important to maximize your deductions and credits each year, taking a long-term approach to tax planning can result in even greater savings over time. For example, investing in a tax-advantaged retirement account like a 401(k) or IRA can not only reduce your tax liability each year but also help you build wealth over time.

Of course, navigating the complex world of tax planning can be overwhelming, especially if you’re not well-versed in tax law. That’s where Scott Marsh Financial comes in. Our team of experienced professionals can help you navigate the tax code, identify areas where you may be overpaying, and develop a customized tax plan that meets your unique needs and goals. From maximizing your deductions and credits to developing a long-term tax strategy, we’re here to help you keep more of your hard-earned money.

Retirement may seem like a far-off concept, but it’s never too early to start planning for it. In fact, the earlier you start, the more time you have to save and prepare for the future. While the idea of preparing to retire can seem intimidating, it’s essential to approach it proactively to ensure you have a comfortable future. Here are a few things to consider as you start planning for your retirement.

For years, Social Security has been a crucial component of many retirees’ income. However, with the rising costs of healthcare and other factors, it may not provide enough income to support a comfortable retirement soon. While the program is not expected to go bankrupt, it may be unable to pay full benefits soon. As a result, it’s essential to start planning for your retirement income outside of Social Security to ensure you have enough money to support your lifestyle.

Today’s economy can make retirement planning more challenging than ever before. The costs of living are high, so many people are struggling to save enough money for an optimal future income. That’s why it’s crucial to start planning as early as possible. The earlier you start saving and investing, the more time your money has to grow. 

Creating a family tradition of philanthropy is more than just leaving behind a sum of money. It’s about instilling values in your loved ones and taking measures to ensure that your charitable gifts continue beyond your lifetime. Charitable giving doesn’t just benefit the organizations you support, either. It can also benefit you and your family. 

Tax-planned charitable gifts, such as charitable trusts, private foundations, and donor-advised funds, can provide you with immediate tax benefits. At the same time, they can also help to ensure that your charitable giving continues beyond your lifetime. 

Speaking of beyond your lifetime, a donor-advised fund or trust may help your gifts outlast you by decades or more. These vehicles can allow you to make charitable contributions during your lifetime while retaining control over how the funds are distributed. This means that you can involve your family in the giving process and ensure that your charitable giving continues for generations to come.

Investing in the stock market can be a roller coaster ride with unexpected twists and turns. One year might bring us a bull market, and the next, we might find ourselves tumbling down with the bears. 

At Scott Marsh Financial, we understand the challenges that investors face during uncertain times. As a CERTIFIED FINANCIAL PLANNER™in Utah, we offer a range of services to help keep your portfolio market-weather-ready. We start by analyzing your existing portfolio to identify areas where we can rebalance and diversify your assets. 

Our wealth financial planning services are designed to help restore your confidence in your investments. We take a comprehensive approach, considering your long-term financial goals, your risk tolerance, and your current financial situation. From there, we develop a customized plan to help you achieve those goals while navigating the ups and downs of the market.

Of course, financial planning is not a one-time event. As your life circumstances change and the market evolves, we continue to work with you, adjusting your portfolio to help ensure that it remains aligned with your goals. We also offer ongoing monitoring and communication to help you stay informed about your investments and confident in your financial future.

Our goal is to help you weather the storms of the market and achieve your financial objectives. By regularly rebalancing and diversifying your portfolio, we can help reduce your risk and increase the probability of returns. Again, spreading your investments across different sectors and asset classes often helps reduce your exposure to the effects of market volatility.

Contact us today to learn more about our retirement planning for high-net-worth individuals.