Yes, it can be done.Kababayan wrote: ↑Mon Jan 04, 2021 9:44 pm Happy New Year Everyone,
After writing this I realized that I take forever to get to my question, so I am just going to ask it here and save the set-up for the later paragraphs. If you would like more set-up as to why I am asking, please read below. I would like to establish generational wealth for my daughter's grandchildren (which she doesn't have yet...she's only 4). According to investment calculators, investing $500 a month at 6% for 100 years will return $20,000,000. That's where the returns begin to skyrocket. At 125 years, the amount is close to $90,000,000. If my great-grandfather (whom I remember) had begun this when he was the age I am now, I would be entering those peak return years. I know it sounds like fantasy, which is why I am asking people who are a lot smarter than I am (you all). Can it be done? If so, any ideas as to the best way to do it? Additional info is below. Thank you in advance.
When my daughter was born (she's now 4), I began putting $300 a month away for her in mutual funds (I am buying Vanguard's Total Stock Market Index etfs). My intention is to be able to use the money for her later in life (buying a car, helping her with the down payment for a house, etc.). My wife and I both have Roth IRA's that we max out every year plus a pension. We intend to continue to invest for her as we get older (in addition to teaching her how to invest). We set aside money for her in mutual funds rather than a 529, Coverdell, or custodial account so that we will have more freedom with the money. We will begin to fully fund her Roth IRA when she begins working at 16 years old.
I would love to be able to set up my future generations financially, at least as best I could. My wife and I both grew up financially-limited, but we always had the love and support of our family. I would like to establish some financial stability for my future family members. Any ideas on how realistic this is and how to keep it all going once my wife and I pass on? We are in our 40's...so hopefully that won't be for quite some time. Thanks again.
I recommend though to just save in your own retirement funds and establish a family LLC to inherit it when you pass on. If you live another 40 years then use that to attempt to establish generational wealth. The most important thing is to try to instill in your daughter thinking about building generational wealth for HER grandkids...
That way your estate planning has a caretaker for at least one more generation rather than someone actively attempting to disable any safeguards you've established.
My personal objective is to attempt to provide my kids (and their potential kids) CONTROL of wealth but not necessarily direct access to money beyond distributions from gains. An estate attorney will be of great value but understand that the more control you attempt from the grave by using legal structures the more likely things are to go pear shaped.
Examples to look at are how the Waltons structured their wealth...or the Rockefellers. Our journey will be on a much smaller scale but if you leave behind a $1-2M estate and your daughter does the same then the probability that you will succeed in building something long lasting goes way up.
Education and communication appears key. This was an easy read if a bit light:
Wealth: Grow It and Protect It - Lucas
https://read.amazon.com/kp/embed?asin=B ... 9FbEX5K2TH
This one reviewed well but I haven't read it yet.
Family Wealth: Keeping It in the Family--How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations
https://www.amazon.com/dp/B003O86FB8/re ... 9Fb2WKJJ9C
There are others...BH is moderately hostile to the concept of trying to build multigenerational wealth. PM me if you like to discuss.