My Opinion on Building Generational Wealth

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My Opinion on Building Generational Wealth

Investor · Member since 2021 · 129 posts · 209 votes

This is something I hear real estate investors talk about all the time. Their goal is to build generational wealth for their kids, grandchildren, great grandchildren, etc. They believe by building a good real estate portfolio and acquiring assets they will create generational wealth for their family. I believe I have a controversial take on this stance. I 100% disagree with this line of thinking!

There are stories of family’s that have had multiple generations build wealth through owning land, real estate, oil, etc. that have lost it all in 1 generation! Wealth is incredibly hard to obtain and 10x harder to keep. Just because you are able to hand over your children and grandchildren wealth doesn’t mean that they will know how to keep it. They have to know how to handle the wealth if they are going to keep it. My focus will be on teaching them how to create and keep wealth, not handing it over to them.

How I will focus to create generational wealth will be the complete opposite of what most people want to do. My kids will not be handed anything in life, they will EARN everything. I will not give them money, instead I will be there to teach them what they need to know to get their own money. I will teach them what I’ve learned in my life that they can use to create their own success. When they need advice, I’ll be sure to provide it. When they are struggling through the rough times, I’ll be there to support them. My goal is to create kids who are good people. If I can do that, they won’t need my wealth, they will have their own.

What are your thoughts about creating generational wealth?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

now from reality.

I have worked in this industry for 50 years now.. and met all sorts of folks from beginners to the Very wealthy..

what I see many times is when the kids do inherit most of them have no interest in owning the rentals or whatever property they are getting as most of the time there is massive equity. And they just want to sell and cash out.. granted some will hold on but for many second they can sell they do so.

So if folks are wanting their kids to keep the assets then they have to be put into a trust with very clear defined rules of the road to follow. Anything short of that and all those rentals yo toiled with will be liquidated as soon as humanly possible.

plus if there is multiple kids rare is it they all have a meeting of the minds .. so again they just sell and divvy up. Specially with stepped up basis.

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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Denis Ponder:

Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

You will be poor with that many kids. LOL
I have 2 teenage boys and they destroy groceries so fast. I started hiding my favorite snacks so they would be there when I want to eat them. My goodness, the food seems to be gone in a matter of days.

lol back in 80 I lived with 8 cousins and my mom got so upset with all groceries gone in ten seconds lol
two kids are nuthin :)
2 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
3y
Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

I guarantee if you had $100 billion you'd have some one hanging around!
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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @JD Martin:

Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

I guarantee if you had $100 billion you'd have some one hanging around!

I bet with just 100k I could still sustain 3GF LOL
1 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
3y
I love your philosophy and applaud you for it.

I also think there's no right answer to this. It depends on your goals, your kids/heirs goals, your personality, and their personality.
So many questions abound - will your heirs use the money responsibly? Or will they squander it and do nothing with their lives? Will you use it? Or will you die with a huge pile of assets and instead of giving your children money that could make their lives and their children’s lives better in their 20s, have them inherit it when they are 60 and it is too late to really change their lives positively?

I've thought about this a few times. I think that the answer is that it depends on where I and my potential heirs are at in 30+ years.

There is no reason to box yourself into a decision that doesn’t need to be made for decades, and every reason to keep an open mind.
Personally, I just don’t want to die with a huge pile of money and no plan. Either I’m enjoying the money, my heirs are, or I need to put in the hard work to figured out how it can actually be used to a positive end by a deserving organization. Easier said than done I bet.

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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @JD Martin:

Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

I guarantee if you had $100 billion you'd have some one hanging around!

By the way I am not totally surprising by your idea that having kid is not good idea , in fact I do believe this is the position that most if not all current Gen Z is going to take. These on-demand generation would have radical mindset than previous generation, they would marry much less, having more mobile, adapt to technology faster , they would have more mobility not just cross cities but also cross continent ; and they think-everything as just like a rent with much less commitment.
I would not surprise within 20 years US population would decrease from childbirth but may increase from immigration standpoint. I believe most of them would not want to continue being landlord but instead may use the money for more mobility.
2 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
I told my kids they can sell all my rentals when I die and do whatever they want with the $. Or keep them and enjoy the mailbox money. I do teach them money management now and hope this wealth won’t all get blown in their lifetime. But I won’t be around, so they can do whatever they want with it when I’m gone. I’m sure they’ll survive. Lol
3 Reply
Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
3y
Quote from @Corey Conklin:

95% agree. Can't tell you how many times I see successful parents who worked really really hard for the assets. Never really enjoyed them much, and then pass on to deadbeat kids who really aren't interested and mismanage and run them into the ground. I've seen some exceptions, but very few.
I would think it would be much better to spend that money on education and experiences and hopefully set the kids up on the right path to success.
In real estate circles we here this "generational wealth" idea so much. I often ask why you want to build wealth for your grandchildren. No one seems to know why. Rarely do I get a good answer. I think there are a lot of creative things you could do with the money. Maybe you give the grandkids $2500/year to volunteer in a foreign country. Maybe you help with closing costs or down payment on the first house. Maybe you give each kid enough money to take a nice vacation every year or eat at a crazy restaurant on their anniversary.
However handing over 10 apartment complexes, or 20-30 unit single family portfolio often turns out to be a bad idea. They're just not as passionate about it as the build/founder was most of the time. And if you have several kids, I think it way too often creates resentment and conflict. Since I like to work probates, this is very very common.
I think about a story about the Waggoner Ranch in Texas. One of the largest. There was certainly generational wealth built, but losts of lost love between family members. I probably have some of the details wrong, but it took something like 100 years to settle the estate. By the time it was over, there were something like 300 heirs. They had gone thru 3 probate judges (either died or retired). Everyone said due to all the disputes, there would never be an agreement to sell and disperse. It finally got done, but think of how many law careers were made on that dispute.
I heard the other day that Anderson Cooper was one of the Vanderbilt heirs. One of the richest families in America at one time....by the time it got to him when his mom Gloria Vanderbilt died, it was about $1,000,000. Now that sounds like a lot of money, but even today with 5% interest rates in HYS account that's $50,000/year...and 2-3 years ago it was $10,000-$20000 when interest rates were lower. Sure everyone would probably like to have an extra $10K to $50K a year, but not exactly life changing these days. Maybe you can live in a slightly nicer place, or drive a slightly better car, or take slightly better vacations, but you probably still need to work.
0 Reply
Benjamin Haberman
Real Estate Broker · Ocean View, NJ · Member since 2014 · 188 posts · 82 votes
3y
My goal is to owner finance my portfolio to my kids. Once they are ready to take on the properties and manage them.
1 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
2y
Building generational wealth is fun. Plus it pays for the kids college, early retirement and fun vacations whenever we want. I don’t care what my kids do with all this wealth. Lol. I told them to feel free to sell all the rentals when I die and do whatever they want with the money. Or keep them and enjoy all the cashflow.
0 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Carlos Ptriawan:

Quote from @JD Martin:

Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

I guarantee if you had $100 billion you'd have some one hanging around!

By the way I am not totally surprising by your idea that having kid is not good idea , in fact I do believe this is the position that most if not all current Gen Z is going to take. These on-demand generation would have radical mindset than previous generation, they would marry much less, having more mobile, adapt to technology faster , they would have more mobility not just cross cities but also cross continent ; and they think-everything as just like a rent with much less commitment.
I would not surprise within 20 years US population would decrease from childbirth but may increase from immigration standpoint. I believe most of them would not want to continue being landlord but instead may use the money for more mobility.
This is exactly what's happening, and the premise of you'll rent and like it. Or whatever statement that was.

Freedom of movement, lack of commitment, agility is the next generation's demands.
1 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Bruce Lynn:

Quote from @Corey Conklin:

95% agree. Can't tell you how many times I see successful parents who worked really really hard for the assets. Never really enjoyed them much, and then pass on to deadbeat kids who really aren't interested and mismanage and run them into the ground. I've seen some exceptions, but very few.
I would think it would be much better to spend that money on education and experiences and hopefully set the kids up on the right path to success.
In real estate circles we here this "generational wealth" idea so much. I often ask why you want to build wealth for your grandchildren. No one seems to know why. Rarely do I get a good answer. I think there are a lot of creative things you could do with the money. Maybe you give the grandkids $2500/year to volunteer in a foreign country. Maybe you help with closing costs or down payment on the first house. Maybe you give each kid enough money to take a nice vacation every year or eat at a crazy restaurant on their anniversary.
However handing over 10 apartment complexes, or 20-30 unit single family portfolio often turns out to be a bad idea. They're just not as passionate about it as the build/founder was most of the time. And if you have several kids, I think it way too often creates resentment and conflict. Since I like to work probates, this is very very common.
I think about a story about the Waggoner Ranch in Texas. One of the largest. There was certainly generational wealth built, but losts of lost love between family members. I probably have some of the details wrong, but it took something like 100 years to settle the estate. By the time it was over, there were something like 300 heirs. They had gone thru 3 probate judges (either died or retired). Everyone said due to all the disputes, there would never be an agreement to sell and disperse. It finally got done, but think of how many law careers were made on that dispute.
I heard the other day that Anderson Cooper was one of the Vanderbilt heirs. One of the richest families in America at one time....by the time it got to him when his mom Gloria Vanderbilt died, it was about $1,000,000. Now that sounds like a lot of money, but even today with 5% interest rates in HYS account that's $50,000/year...and 2-3 years ago it was $10,000-$20000 when interest rates were lower. Sure everyone would probably like to have an extra $10K to $50K a year, but not exactly life changing these days. Maybe you can live in a slightly nicer place, or drive a slightly better car, or take slightly better vacations, but you probably still need to work.

My nephew will definitely assume my brother's portfolio and has a very keen interest on real estate. He's 16, intends to skip college, and become a real estate agent once he graduates. And we already have him lined up to be an intern at a brokerage here shortly. None of this was by force, but he was born in 2007 and seen my brother build an empire more or less. Since he was about 10 he's been at all the off-sites he travels to, to accompany him and see what it's like. He's got a huge, huge interest in this. He's definitely on the spectrum and more or less obsessed, so he's got a great avenue to pass this to.

My sons are much younger, and I'll decide what I have to do with mine but I am pretty confident they'll want this for keeps. For now though, the goal is to get this entire portfolio set by 2027, tap out of my other endeavors and live off the passivity at my age with three kids right before their teenage years.

2 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @V.G Jason:

Quote from @Carlos Ptriawan:

Quote from @JD Martin:

Quote from @Carlos Ptriawan:

Quote from @Corey Conklin:

Quote from @JD Martin:

Quote from @Joe S.:

Quote from @Carlos Ptriawan:

Quote from @Sharon Mittelman:

Quote from @Corey Conklin:

Quote from @Sharon Mittelman:

@Corey Conklin Not sure how old are your kids. when I started educating my kids they were young.
One of the things I did with them was open a special saving account (local Credit union) that gave  them 6% on the 1st $500. that meant over $2 every month in interest.
When they asked for a new toy - I told them :"you have money in the bank, you can use it but if you do you will het less interest. So do you really want the toy or do you prefer more money from the bank", most of the time they said :"I'll take more money" :)

@Sharon Mittelman That is a great idea. Help your kids understand that money is a tool to enjoy life and the power of compounding interest!
My child is still young and expecting our 2nd soon. We aren't done having children so it's been a topic that my wife and I have been discussing a lot lately. We not only want our children to work hard and understand how money works, we want them to not attach themselves to material items. Your new toy example does a good job at teaching these principles.

@Corey Conklin  It is time to start them on the 401K plan !
With just $1K /year from age of 1 to 65 at 12% They will have almost $12,000,000 tax free money.
If you wait till they are 18 , the same $1K/year at 12% is less than $2,000,000. You just lost your kid $10,000,000 .
Just something to think about.

And also 529 college tuition plan. Start from very early.

I was very happy this week as i just paid my son the last chunk of his tuition fee using 529 and real estate money , basically zero cost education lol…. All these investments after all the years are worthed as kid would finish their university with zero debts zero student loan , and he got 6 digit income even before he graduated.

invest in 401k/529/Ira/real estate is all worthed…

What if my kids don’t wanna go to college. Lol.

Good point! It also winds back to another point: having kids is almost certainly one of the worst financial investments anyone can make. If we're going to talk about things from a pure dollar and sense point of view, there's fewer black holes for money than kids unless you have a farm and can take advantage of free labor once they are of age. Otherwise, you have added a number of individuals to your household who are unable (physically/legally/emotionally/etc) to pay for their own keep.
So if one *really* wants to maximize investment potential, having kids should be pretty far down on the list. Now let's see the comments fly! 😅

I see where you are coming from when you say kids are a terrible financial decision. They aren't cheap and they take up a lot of your time. They test your relationship with your spouse, take away your freedom (and sleep), and will drive you crazy at times!
But having a child will open your eyes to a whole new way of life that is unexpected. Watching a child grow is one of the most amazing things I've experienced in my life.
If you choose to not have children (which is 100% your choice) for financial gain, you will lose out on one of the greatest experiences in life.

yea i'd rather be poor with 5 kids than having 100 billion with noone around me lol

I guarantee if you had $100 billion you'd have some one hanging around!

By the way I am not totally surprising by your idea that having kid is not good idea , in fact I do believe this is the position that most if not all current Gen Z is going to take. These on-demand generation would have radical mindset than previous generation, they would marry much less, having more mobile, adapt to technology faster , they would have more mobility not just cross cities but also cross continent ; and they think-everything as just like a rent with much less commitment.
I would not surprise within 20 years US population would decrease from childbirth but may increase from immigration standpoint. I believe most of them would not want to continue being landlord but instead may use the money for more mobility.
This is exactly what's happening, and the premise of you'll rent and like it. Or whatever statement that was.

Freedom of movement, lack of commitment, agility is the next generation's demands.

From lifestyle , political view, maps of immigration ; these GenZ is very radical and almost acts in the opposite way from  Baby Boomers gen.

It does affect mortgage and housing too but not in how it's being thought by common older folks in 2023. They would not apply for mortgage for a lot.
But they would apply for short term luxury apartment with short term lease.

They would look for good nice chic SFR in Class A/B and/or luxury MF in Class A. But it's almost likely that they would not apply for mortgage.
Bad for lenders ! But good for apartment owner in good city.

Currently the typical age when FTHB purchase home is 36. But for GenZ I may expect this # to be in between 40-45 years old , why ? because they would marry less (last cencus said the # of gen z that want to establish into marriage institution is 40% less and at that also would be done in much later of their life). Which also means they would not become landlord en masse like folks that was born in 1950-70.

Since our financial regulation indirectly has financial bias to support working marrying couple (ratio of income to rent is now 1:4.5 in many cities) before they even able to apply mortgage then the number of mortgage application would be less.

While class C SF/MF would be supported by migration young-folks pattern (they are also GenZ but from different country).

Another trend that I read is that .... these two decades really makes Baby Boomers very rich, but most of them, rather than giving it to the next generation (Milleneal of Gen Z), they would take it all for themselves LOL LOL so greedy haha....

It means lot of senior housing required . Also tourism industry would be more booming as it's being hunted by two generations (baby boomers and GenZ). I can see this myself as my Airbnb is like 99% occupied.
2 Reply
Michael Moy
Member since 2018 · 12 posts · 8 votes
2y
I'm 43 and have a two year daughter. This is on my mind every day. I may be in a different situation since I waited so long to have children, however I plan to educate my daughter as much as possible and introduce her to the business as she is growing up. If she is interested, she can be involved as she grows up. If not, her college will be paid for if she chooses that route and she will likely be given a house to either live in or rent rooms out to friends to help with her expenses. If she does well, everything will be left to her. If I think the inheritance will harm her, it'll be set up in a way I see fit that provides what she needs and nothing more. It all depends on the kid. If you see them doing well enough that you believe they can do it on their own, I don't see a problem with giving them a head start unless you think they would value the satisfaction of doing it on their own. If they are making self destruction choices with money, then obviously limit it. Long story short. Nothing should be handed over, allow your children to have a purpose and most will turn out fine.
1 Reply
Timothy Howdeshell
Investor · Fresno, CA · Member since 2016 · 222 posts · 237 votes
2y
Quote from @Corey Conklin:

This is something I hear real estate investors talk about all the time. Their goal is to build generational wealth for their kids, grandchildren, great grandchildren, etc. They believe by building a good real estate portfolio and acquiring assets they will create generational wealth for their family. I believe I have a controversial take on this stance. I 100% disagree with this line of thinking!

There are stories of family’s that have had multiple generations build wealth through owning land, real estate, oil, etc. that have lost it all in 1 generation! Wealth is incredibly hard to obtain and 10x harder to keep. Just because you are able to hand over your children and grandchildren wealth doesn’t mean that they will know how to keep it. They have to know how to handle the wealth if they are going to keep it. My focus will be on teaching them how to create and keep wealth, not handing it over to them.

How I will focus to create generational wealth will be the complete opposite of what most people want to do. My kids will not be handed anything in life, they will EARN everything. I will not give them money, instead I will be there to teach them what they need to know to get their own money. I will teach them what I’ve learned in my life that they can use to create their own success. When they need advice, I’ll be sure to provide it. When they are struggling through the rough times, I’ll be there to support them. My goal is to create kids who are good people. If I can do that, they won’t need my wealth, they will have their own.

What are your thoughts about creating generational wealth?

Unfortunately, I'm not quite at the spot where I need to worry about generational wealth, but it is an interesting topic and I'm confident I'll get there.
I do agree with your assessment though. It seems that most people who get given money and life, especially in large amounts, do not seem to have good outcomes with it. I think the biggest benefit to getting wealthy is becoming the kind of person who can get wealthy. If that is just given to someone, perhaps it will work out well. But if things don't go well for them, they will not be able to recover and build themselves up on their own merits. There is an interesting high correlation between people who have had early childhood trauma and go on to be corporate executives, entrepreneurs, or other high success positions. There's something to be said for having a chip on your shoulder. Something to prove and a deep burning hunger. Knowledge resourcefulness and tenacity are the things that I want to impart not handouts.
1 Reply
Jake AndronicoBusiness Member
Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
2y
Quote from @Corey Conklin:

This is something I hear real estate investors talk about all the time. Their goal is to build generational wealth for their kids, grandchildren, great grandchildren, etc. They believe by building a good real estate portfolio and acquiring assets they will create generational wealth for their family. I believe I have a controversial take on this stance. I 100% disagree with this line of thinking!

There are stories of family’s that have had multiple generations build wealth through owning land, real estate, oil, etc. that have lost it all in 1 generation! Wealth is incredibly hard to obtain and 10x harder to keep. Just because you are able to hand over your children and grandchildren wealth doesn’t mean that they will know how to keep it. They have to know how to handle the wealth if they are going to keep it. My focus will be on teaching them how to create and keep wealth, not handing it over to them.

How I will focus to create generational wealth will be the complete opposite of what most people want to do. My kids will not be handed anything in life, they will EARN everything. I will not give them money, instead I will be there to teach them what they need to know to get their own money. I will teach them what I’ve learned in my life that they can use to create their own success. When they need advice, I’ll be sure to provide it. When they are struggling through the rough times, I’ll be there to support them. My goal is to create kids who are good people. If I can do that, they won’t need my wealth, they will have their own.

What are your thoughts about creating generational wealth?
Great post. Over a long enough time horizon, it will be eroded (almost certainly).

I do agree that teaching someone HOW to fish rather than supplying them with fish is a phenomenal parenting technique that will serve them well.
415-233-1796
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Michael Moy:
I'm 43 and have a two year daughter. This is on my mind every day. I may be in a different situation since I waited so long to have children, however I plan to educate my daughter as much as possible and introduce her to the business as she is growing up. If she is interested, she can be involved as she grows up. If not, her college will be paid for if she chooses that route and she will likely be given a house to either live in or rent rooms out to friends to help with her expenses. If she does well, everything will be left to her. If I think the inheritance will harm her, it'll be set up in a way I see fit that provides what she needs and nothing more. It all depends on the kid. If you see them doing well enough that you believe they can do it on their own, I don't see a problem with giving them a head start unless you think they would value the satisfaction of doing it on their own. If they are making self destruction choices with money, then obviously limit it. Long story short. Nothing should be handed over, allow your children to have a purpose and most will turn out fine.

just started investing 529 for their college and direct real estate with 30YFRM for them both. Each kid, one house, so buy two or three.

I am done using my 529 LOL it was fun ...

Have 6 kids ? purchase 7 houses.
0 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Generational wealth is almost impossible to manage until you know how the kids are going to unfold. The best suggestion I got from an estate lawyer is manage the assets as best as you can right now, with a default option for an (accidental) death today. Keep it updated annually.
When the time comes to pass it off, have the discussion with them. And rationalize it based off their behavior and actions, less of their talk and desires.
Kids these days are incredibly different, it's almost impossible to see how this shapes up.
1 Reply
Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
2y
@Corey Conklin we will and are experiencing the largest transfer of wealth of all time. Many kids will have to deal with this and it is a challenge no matter how you look at it. Like they say money is easier to make then it is to keep especially when it is not earned,
I understand and have seen people that come from poverty that do not want their kids to suffer but many times it is the suffering that was their motivation to excel. It can be good to be hungry but if the kids are spoiled they can become resentful if their lifestyle takes a turn in adulthood.
1 Reply
Josh YoungPro Member
Rental Property Investor / REALTOR® / Property Manager · Gilbert, AZ · Member since 2023 · 384 posts · 421 votes
2y
@Corey Conklin great post! This is talked about in the book: "The Richest Man in Babylon"
The clay tablets with the information of how to make, save, invest and keep wealth are worth a lot more than the purse full of gold.
[email protected]802-274-8121
3 Reply

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