Is Generational Wealth Only for the Rich? Think Again
Generational wealth is not reserved for the privileged few. It can be built step by step, even from modest beginnings, when families apply discipline and think in decades rather than days. The topic is particularly relevant for Value Investors, since the same habits that underpin success in equities (patience, thrift and resilience) are the very ones that create enduring legacies.
The encouraging truth is that generational wealth is attainable even for those who do not begin with substantial assets. The tools are available but success requires patience, thrift and a willingness to think in decades rather than days.
Laying the Groundwork: Build Financial Stability
The first step is to establish a foundation. That means managing debt, creating an emergency reserve and developing consistent savings habits. Without stability long-term investing becomes difficult.
Next is to invest for growth. Over long periods equities have provided some of the strongest returns of any asset class. A value-oriented approach of purchasing shares of quality businesses when prices are attractive has historically rewarded patient investors. Reinvested dividends and the power of compounding are the quiet engines of wealth creation.
Live Below Your Means: Thrift as a Wealth Building Tool
Equally important is to live below one’s means. Thrift is not synonymous with denial but with intentionality. Every dollar not consumed is a dollar that can be put to work for the future. Over time the cumulative effect of disciplined spending and steady investing is profound.
We also emphasize education. Money without knowledge is easily squandered. Passing along financial literacy such as how to save, invest and avoid excess debt is as important as leaving financial assets themselves.
Balance Today and Tomorrow: Wealth Without Sacrificing Joy
Finally, balance remains critical. Vacations, celebrations and life’s small pleasures need not be sacrificed. The key is moderation. By aligning spending with values and focusing on long-term investing one can enjoy today while preparing for tomorrow.
Generational wealth is not built overnight. It is the product of countless small decisions such as consistent savings, prudent investing and disciplined living compounded over time. The result is a legacy that not only provides financial support but also instills enduring values.
Kovitz Investment Group Partners, LLC (“Kovitz”) is an investment adviser registered with the Securities and Exchange Commission. This report should only be considered as a tool in any investment decision and should not be used by itself to make investment decisions. Opinions expressed are only our current opinions or our opinions on the posting date. Any graphs, data, or information in this publication are considered reliably sourced, but no representation is made that it is accurate or complete and should not be relied upon as such. This information is subject to change without notice at any time, based on market and other conditions. Past performance is not indicative of future results, which may vary.
