How The Ultra-Rich Never Die by Forbes – Entrepreneurs

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Want to hear a tip for joining the ranks of the ultra-wealthy of the world?

Photo by Samuel Zeller on Unsplash

Want to hear a tip for joining the ranks of the ultra-wealthy of the world? To joining those, though some have been gone now for many years now, whose wealth is still supporting and growing their family and enriching society? Here it is: instead of investing in the stock market- which you don’t control- invest in your future heirs.

I think we often become short sighted in our investments. Beyond the stock market we also tend to invest our money into things that are unique to our own individual understanding. Rather than hoping that our next generation will understand those specific fields of work and interests which have built our wealth, and just assume they’ll be able to carry them on, we need to approach how we pass on and grow our estate with a different strategy.

This new strategy begins with trying to understand more about our heirs and who they are. What are their unique skills, abilities, competencies and drivers? Our focus has to be on where we can contribute to those positives the most.

We need to invest in ideas that help them to expand what they are capable of as human beings, and allow them to grow the estate. We don’t want to separate from them with some asset allocation or portfolio that they don’t know anything about, managed by people that they didn’t choose. That kind of cold, distant legacy building isn’t what’s going to last for generations to come.

When investing in your heirs, what you are really doing is stabilizing your assets. Because once you establish a certain amount of wealth then the ‘trust’ becomes all about risk free capital. The only time you allocate money towards risk is the risk you take in investing in heirs. This risk is taken so that they can learn, have access to cash, are able to safely make mistakes, and will be able to teach their heirs, and then hopefully have some big wins along the way.

Instead of trying to build assets and take a massive risk on an inheritance or trust plan, we invest in the talents, interests, abilities and skill-sets of those we choose to be the ones to carry on and benefit from our legacy.

When we do this it allows us to be more adaptable and flexible concerning the future. And because we don’t control the economy, we don’t know what inflation is going to be, and tax changes are inevitable, then you’ll have an “insurance” on your heir(s) that is permanent in nature. This will make it so when they also pass on- even if they didn’t grow the trust- if they just grew themselves and engaged their purpose and understood their contribution to the world, then it’s at least replenished upon death through the life insurance. So instead of taking risk with assets and things out of their control, it is about who they are.

This way you are not paying back the banks interest, and you can instead utilize the benefit of paying back the family bank and trust when money is borrowed to start businesses, to buy homes and to go to school. Then interest in coming into the family, not into an institution. This will prove to build a lot more wealth over time.   

The best things to leave your heirs are core values. The philosophies that allowed you to achieve your wealth, so that there are sign post for future generations. Having traditions that help reinforce that engagement, and familial aspect. Like a corporation would with a corporate retreat, you can have family retreats. You have symbols in the family, like you would have a logo with your business. You can even create a family mission statement.

And that starts to be what your legacy is: uncovering, discovering and investing in your heirs. Doing this now, while you are alive, will leave them more prepared to build that wealth after you are gone- especially if there are rituals and traditions to keep it going for your grandchildren and great grandchildren.

We need our heirs to understand and be a part of this legacy strategy. We need to tell them “we’re going to invest in you”. We need to ask them “Who are you? What do you want to become? What is most important to you?”.

And you have to accept that some will want careers in things that will make a lot of money, and others might want to devote their life to something that will not, but is really fulfilling to them. It’s all about helping them build a life that they love.

This strategy of putting more time and effort into your heirs will not only secure and sustain your wealth for future generations to come, but will make the journey along the way a much more fulfilling one for you and your family.

Invest in people, not products.

June 15, 2019 at 08:48AM
Forbes – Entrepreneurs