Cornelius Vanderbilt died in 1877 and left his kids today’s equivalent of $2B. Eighty years later, 120 of his descendants were at a family reunion at Vanderbilt University, and there wasn’t a millionaire among them.
This is not unusual.
It is very hard to create a lot of wealth, and it turns out, it is even harder to make it generational. There appear to be a lot of reasons for this. For example, the hunger to prove oneself financially, which is often deeply embedded in first generation wealth creators, doesn’t translate the same way to the second generation who knows they have a trust fund to fall back on. And there is certainly no guarantee your next generation is going to be any good with money. The Vanderbilts (post Cornelius), for example, squandered millions for years on life’s finest luxuries, all the while their investment holdings were dwindling.
It seems “generational” wealth may not be all it’s cut out for, and, besides, you won’t have anything to say about it. Remember, you’re dead.
Instead, consider the following more tactical/executable wealth benchmarks you can use today to create some impressive, usable, impactful wealth now.
Here are the 4 T’s to building wealth:
Step 1 – Team
Build a capable financial team to help you organize, improve, and read the financial data you’re generating today. Or more simply said, who manages your finances and how much time you invest in learning about them matters. A lot. I’m talking about bookkeepers, tax accountants, and financial advisors.
Step 2 – Taxes
Get a handle on tax planning. Unless you’re uber wealthy, this is actually pretty straightforward. Most people spend too much time worrying about this or looking for tricky solutions instead of doing the real work, which is meeting proactively with a good tax accountant a couple of times a year.
Step 3 – Trust
Set up a trust. If you own any assets, you probably need a trust and not just a will. It’s not sexy or fun, but it is critical. Otherwise, your untimely demise will leave a mess, making it all but certain you don’t transfer as much wealth as you could have.
Step 4 – Trading
Develop an investment plan with a team of professionals who have a variety of skills. This needs to be a document with measurable action steps.
