Generational wealth is exactly as it sounds.
While having your financials in order is certainly important, what if you want more? What if you don’t just want the kind of money that affords you the life you want, but the kind of money that sets up your loved ones as well?
If you’re looking to build generational wealth in 2024, it all starts with that first step. You don’t need to be rich. All you need is a willingness to learn and an approach that is consistent over time.
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For Black families who have historically faced economic barriers, these five investment vehicles can go a long way.
Let’s get right into ’em…
1. REITs
Real Estate Investment Trusts (REITs) are not properties like traditional real estate. Rather, they’re companies that own, operate, and finance real estate. When you invest in REITs, you’re investing in a part of income-producing properties without actually buying the property. This is nice because it gives you more flexibility, and you’re not on the hook for things you would be with normal property purchases (like property management!).
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Wanna get started with REITs?
Thanks to many low barriers to entry, you don’t need a lot of money. Check into brokerage accounts like Fidelity and Robinhood, or even online opportunities such as Fundrise. With Fundrise, you can get in the game for only $500!
2. Index Funds
Wanna get into stocks and mutual funds?
With index funds, you basically have your eye on one particular index. A common index is the S&P 500, which keeps 500 big publicly traded companies right on your radar. With index funds like this, you can get access to a lotta the market without needing substantial capital or responsibility.
In other words, it’s ideal for passive investors.
Moreover, you also get the chance to diversify across all kinds of industries, which is a crucial way to lower your risk.
If you wanna get into stable and predictable growth, consider brokerage accounts such as Robinhood, Charles Schwab, or Vanguard. Getting involved is made easy, and you’ll find plenty of resources to explain the game for ‘dummies.’
In no time, you’ll be on your wealth-building journey!
RELATED: Building Generational Wealth: The Role of Life Insurance in Black Families
3. IRAs
The Individual Retirement Account (IRA) is specifically created to help eventual retirees get the most out of their retirements. With IRAs, you’ve got two options: traditional, and Roth. For traditional, any contributions are tax-deductible, and for Roth, you can withdraw tax-free when retired.
If you lack a retirement plan through your employer, IRAs are super important. The best part is, that they can be opened across all types of credit unions, banks, and even online through brokerages such as Wealthfront. The coolest thing is, that you can get access to automatic tools and even AI assistants that can take all the effort out of getting going.
If you’d prefer a human (who wouldn’t?), check in with a certified financial planner (CFP) before getting in too deep.
4. Crypto
This exploding virtual currency is especially big among the younger, tech-savvy generations who love its decentralized nature. If you’ve heard of Bitcoin and Ethereum – the most popular forms – you’re getting somewhere!
But even if you haven’t, getting in the game isn’t super difficult.
One word of caution on cryptocurrency, however, is that it can get quite volatile. While the rewards can be sky-high, the risks can put you in an abyss if you’re not careful!
Before you get started, consider talking to an advisor or somebody well-versed in the currency. Platforms like Coinbase and Robinhood are good ways to get started. Whatever you do, start by investing only what you know you can lose.
Better safe than sorry, as they say.
5. Education Funds
Education is an investment for the future, and with education funds, it’s no different. Plans such as the 529 are tax-favored and allow you to save for the education costs of your loved ones. This can help with everything from tuition to room and board, books, and other related expenditures.
If you’re considering education funds, look through state programs as well as financial institutions. You don’t need to contribute a lot, you just need to do it consistently. You may also consider what’s known as an Individual Development Account (IDA).
Available in some states, these savings accounts allow you to save for education, business, owning a home, and other important financial endeavors.
As with all financial pursuits, the key is being consistent, being vigilant, and frankly, just being honest. What do you want? When do you want it? What’s your risk tolerance? How much do you want to contribute?
By speaking to a certified financial planner, you can capitalize on these investment vehicles for yourself and your loved ones years down the road!
