Leaving a Legacy of 900 Years
You may have heard that if substantial wealth is created in a family, it tends to disappear by the third generation.
This happened to me and my family so I have first hand experience on how this can occur!
I have seen many other examples of this in real life, and the way that wealthy families combat this phenomenon is by training the next generation in wealth stewardship from an early age.
They don’t wait until the children are grown; education starts early.
This is one of the elements of creating wealth that could last for at least seven generations, a concept that has its origins in the Iroquois culture -Confederacy of six North American peoples: Mohawk, Oneida, Seneca, Onondaga, Cayuga, and Tuscarora who lived mainly in southern Ontario and Quebec and northern New York State.
Author James Rickards on his book "The Road to Ruin" talks about a European family that has preserved their wealth for over 900 years! This concept has recently been popularized by a number of personal finance authors.
The basic idea is that with everything you do today, you think about how it will impact the seventh generation after you.
Families who have been able to preserve wealth for many centuries despite wars, economic crashes, disasters, inflation, etc, such as in Europe, have historically put their wealth in three categories:
Real estate
Precious metals (gold and silver)
Investment-grade art
As you can see, real estate is a major category, and it has many benefits such as:
holding its value despite inflation over the long term
having the potential of appreciation
generating an income
tax benefits
What if there is a war and the Real Estate gets confiscated?
Author James Rickards talks about that in his book, and I have the perfect example because it happened to my Grandfather!
He used to own an apartment in Budapest, on the "Rodeo Drive" part of town on a street named "Váci utca" pronounced in English "VAH-tsee OOT-tsaw".
Today this street can be compared to 3rd St Promenade in Santa Monica, Los Angeles.
When Hungary was invaded by the Soviet Union in 1956 they expropriated his place.
Many years later, in the 1990s, the Hungarian Government offered him his apartment back.
The best thing you can do is getting your kids involved NOW, even if they are young, in the process of purchasing real estate, evaluating real estate, selling real estate, renting out real estate, screening tenants, etc...
Another important consideration in leaving real estate to your kids is the formation of family Trusts.
Trusts are a relatively simple tool you can use to share the real estate wealth you created with your kids, while providing many major tax benefits. They do have to be set up properly.
When it comes time for you to think about these things, I have relationships with excellent professionals who can help you set this up.
Most of my clients are business owners, and the real estate assets they hold can:
provide cash flow when needed for the business
a cushion for when the going gets though
provide for income later in life
increase your net worth, something you need when applying for a loan
take out large chunks of cash for business projects when you need it —without losing the property.
Especially for artists, I have seen that real estate can be a lifesaver.
It introduces stable income and a financial cushion that appreciates over time, in a career that could otherwise by nature be subject to extreme financial highs and lows.
Real estate can be the bedrock of what you do—the bass line in a piece of music, if you will, with the rest of your life as the music and melody on top.
Owning properties is also fun. It’s fun to maintain properties in good condition, improve them where possible and have a stake in your local community.
Helping people go from Renter to Real Estate Empire is actually one of my favorite things to do in my job as a Mortgage Broker and Real Estate Broker.
Let me know if I can help you in any way, or if there are any additional topics you would like me to write about!
