The belief that abilities and hard work are the most important predictors of success in life is comforting, but a growing number of studies are showing it to also be false. Born to Win, Schooled to Lose, a study performed by the Georgetown University Center on Education and the Workforce, showed how high socioeconomic status influences the success rates of children from kindergarten up to college enrollment.
By their early adulthood, seven out of ten kids from affluent families managed to achieve high socioeconomic status despite doing worse on tests early on. Kids from less affluent families who had better success on tests early on had a different experience; only three out of ten of them managed to enter early adulthood with high socioeconomic status.
Pulling oneself up by the bootstraps, while possible, might not be all that it’s cracked up to be. Having a cushion of generational wealth to serve as a stepping stone or a safety net could be better. Generational wealth is looked at as a contributing factor for many inequalities that continue to plague the world. While most people can do little to put an end to them, what they can do is start working toward building generational wealth for their own families.
Setting the Foundation of Generational Wealth
There are different types of investments that people looking to build generational wealth might try, but there’s one that stands out from the others: buying a home. Homeownership is traditionally seen as a safe and smart investment, and recent surveys show that confidence in it is still high; 85% of consumers see it as leading toward a better financial status while noting that it’s a safe type of investment that shows a lot of potential.
Dylan Suitor, the head of the Elevation Realty Network, and a realtor who started investing in real estate in his teens, says that helping people start their generational wealth journeys has been a privilege of his career. “Every day when I go to work,” Dylan Suitor says, “I go knowing that I have the opportunity to change the outcome of someone’s life through homeownership or investing in an asset.”
Dylan Suitor has made building generational wealth one of the missions of his career, but he doesn’t stop there. “Investing in real estate is a great way of diversifying a family’s portfolio,” he says. “People can also use real estate investment as a way to earn a passive income or plan for retirement.”
Avoiding the Loss of Generational Wealth
The second biggest problem with generational wealth, right after how to start building it, is how to avoid losing it. An often-cited statistic says that by the third generation, 90% of families will lose their generational wealth. Preventing that from happening while simultaneously working on building the wealth up in the first place might be a difficult task, but there’s always something to be done.
Investing in the education of the future generations is always a good choice. It becomes even better if the term “education” is taken broadly enough to encompass things other than just attendance of institutions of formal education. Future generations need to be financially literate, but they also need to understand the importance of generational wealth and the difficulties of accruing it. It’s about creating a family culture that recognizes and values the privileges that come with not having to take out student loans.
Apart from education, making sure that the family’s portfolio is diverse and that it contains good long-term investments might be the best thing that anyone can do now for future generations. That, and maybe making sure that some of that generational wealth goes toward ensuring that future generations have a healthy environment to grow up in.