This week on The Shades of Entrepreneurship podcast, I had the pleasure of welcoming realtor Nathaniel Getzels.
Nathaniel is a prominent figure in the real estate industry with a wealth of experience, a strong network, and a dedication to both business ventures and community involvement, and we dove into the critical topic of generational wealth.
Read: Building Generational Wealth: Why It Matters and How Entrepreneurs Can Get Started
As entrepreneurs, it's a conversation we need to have because building wealth is about more than just success for ourselves—it’s about ensuring financial stability for generations to come.
What is Generational Wealth?
Generational wealth refers to any kind of asset—whether cash, investments, stocks, bonds, properties, or even entire companies—that families pass down to future generations. Most often, this wealth is transferred through inheritance, though it's important to note that many American families receive inheritances under $50,000.
We often hear about “trust fund babies,” individuals born into financial security, allowing them to live comfortably without needing to work. But the real story behind those trust funds is generational wealth, accumulated and passed down from one generation to the next, providing opportunities and advantages that can make all the difference in life.
Why Should Entrepreneurs Care About Generational Wealth?
Generational wealth doesn't just give individuals more options in life; it plays a significant role in wealth inequality.
Take a simple example, often illustrated through social experiments. Imagine 100 people lining up for a race, but before the race begins, those with certain advantages get to take steps forward. If you didn’t have to worry about paying for college, that’s 2 steps forward. If you never had to pay for a car or cell phone, that’s another 2 steps forward.
Suddenly, the race isn’t fair at all. The gap between the front-runners and those still at the starting line is striking—and this gap is often created by generational wealth.
The disparity is real. In 2019, white families had a conditional median expected inheritance of $195,500. In contrast, Hispanic families expected $150,000, while Black families anticipated just $100,000. Furthermore, only 10.1% of Black families and 7.2% of Hispanic families received any inheritance, compared to 29.9% of white families, per Fortunly.
These numbers underscore the deep racial and economic inequalities that persist in our country. Generational wealth often plays a pivotal role in entrepreneurial success, providing the capital needed to launch or expand businesses. This is why it matters.
How Can Entrepreneurs Build Generational Wealth?
You might be thinking, “That’s great, but I don’t come from wealth. How can I start building generational wealth from zero?” The good news is, it’s possible, but it starts with a plan.
Here are a few key strategies:
Invest in the Stock Market
Investing in the stock market can be a powerful way to create generational wealth, as it allows your money to grow over time. Gaining a basic understanding of stock market sectors, bonds, and risk is essential, and working with a financial advisor is highly recommended to help you navigate this.
Real Estate Investments
Real estate is another proven way to build wealth. Rental properties can provide consistent cash flow, and real estate often appreciates over time. Well-placed investments in property can generate income for generations.
Build and Pass Down a Business
Entrepreneurs, this is where you can shine! Build a business that not only sustains your family now but can be passed down to future generations. Family-owned businesses like Walmart, Comcast, and BMW have stood the test of time, showing the power of building something lasting.
Life Insurance
Life insurance is often overlooked but can be a vital part of creating generational wealth. It provides financial security for your family if something happens to you. Speak with a professional to explore your options.
College Savings Plans
Student loan debt is a major burden for younger generations. Setting up a college savings plan, like a 529 plan, can help your children or grandchildren avoid that trap. Plus, it’s a tax write-off and could transfer 529 plan into an IRA with Secure 2.0 Act.
Teach Financial Literacy
One of the best gifts you can give the next generation is financial education. Help your kids understand personal finance, the dangers of debt, and the value of saving and investing. Teaching them how to manage credit, loans, and interest rates will set them on the path to financial security.
Create an Estate Plan
Finally, an estate plan or will ensures that your wealth is passed down according to your wishes. Consult with an attorney to set this up properly, safeguarding your family’s future.
Why Generational Wealth is Essential for Entrepreneurs
Generational wealth isn’t just about financial gain; it’s about breaking cycles of poverty and inequality. For communities of color, this is especially important. As we’ve seen, families of color are far less likely to inherit wealth, which contributes to widening economic disparities.
As entrepreneurs, we have the power to change this narrative—not just for ourselves but for future generations. When we build businesses, invest wisely, and teach financial literacy, we’re creating more than just wealth; we’re building opportunities for our children and grandchildren to succeed in a world where the playing field is often far from level.
Take Action
To get started, assess where you stand financially and create a plan. Whether it’s real estate, stocks, or starting a business, the time to start building generational wealth is now.
Visit Getzels Group to learn more about real estate opportunities, and remember, building wealth takes time—but the impact can last for generations.
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