Unlock your legacy: Understanding and creating generational wealth

What is generational wealth?

Generational wealth refers to the wealth and assets that are passed down from one generation to the next within a family or community. This type of wealth is accumulated and built over time and can include financial assets such as property, businesses, stocks, and other investments.

Historically, generational wealth has played a significant role in shaping societies and economies. Many cultures have a tradition of passing down wealth and assets as a way to preserve a family's legacy and provide a sense of security and stability for future generations. To this day, keeping land and businesses in the family is a cornerstone of cultures around the world.

Why is generational wealth important?

The importance of building generational wealth remains crucial, as it can help break the cycle of poverty and provide future generations with opportunities for upward social and economic mobility. It also allows families to weather financial crises and create a sense of stability and security.

How to build generational wealth

Here are some ways you can use Vanguard's products and services to build wealth and create a strong financial legacy:

• Get personalized financial advice. Tap into Vanguard's expertise and advice to create a plan that suits your individual financial goals and circumstances.

• Build a diversified, low-cost portfolio. Construct a diversified portfolio using low-cost Vanguard funds to help manage short-term market risks while aiming for long-term growth, both of which are essential for building generational wealth.

• Get proactive with estate planning. Help ensure your family's wealth is preserved and intentionally passed down to future generations with estate planning guidance from Vanguard, including the creation of wills, trusts, and financial directives.

• Harness the power of early investing. Take advantage of compounding, which can significantly increase wealth over time. The sooner you start investing, the better! Vanguard supports this with accessible platforms that make it easy to invest, even with small initial amounts.

At Vanguard, we're committed to providing tools and resources that can enable all investors to build a lasting legacy.

Strategic investing for the long-term

The fear of short-term market losses can be daunting. However, Janelle McDonald, head of Vanguard Wealth Management, notes that, 

A diversified portfolio spreads your money across many investments. If one drops in value, the others can help offset the losses and stabilize your portfolio. This strategy, coupled with Vanguard's personalized advice, can help provide the emotional value and peace of mind that come from knowing you're on the right track.

Building your legacy and helping to close the wealth gap

Vanguard democratized access to low-cost mutual funds and made personalized financial advice—once reserved for the financial elites—widely available to those seeking a solution to help them achieve investment success for themselves and future generations. 

A passionate advocate for financial literacy and empowerment, McDonald highlights the importance of getting an early start and investing wisely. "Starting early isn't just about securing your future; it's about building a legacy that benefits the next generation," she emphasizes. 

How to pass on generational wealth

Estate planning is another critical area where investors can benefit from Vanguard's expertise. McDonald stresses the importance of creating wills, trusts, and financial directives to take control of your assets. "Estate planning is essential for building and protecting a legacy," she explains. By doing so, investors can ensure their assets are preserved and passed down intentionally, protecting loved ones from legal complications and creating a safety net for future generations.

Here are some ways investors can leverage Vanguard's products for estate planning:

• Use Vanguard's advice platform for personalized financial advice, ensuring your assets are managed and preserved according to your wishes.
• Create wills and trusts with the guidance of Vanguard's advisors.
• Develop financial directives with Vanguard's support and appoint trusted individuals for managing finances and health care decisions if you become unable to do so.
• Engage in conversations with Vanguard's financial advisors about specific considerations related to your financial and family situation, ensuring alignment with your values and goals.
• Start estate planning regardless of wealth level, as Vanguard offers advice services for investors starting with as little as $100, up to those managing $5 million or more.

With Vanguard's support, you can navigate the complexities of financial growth and estate planning with confidence and help ensure a legacy of wealth and empowerment for years to come.