15 Ways to Create GENERATIONAL WEALTH

You know, by the time 65 rolls around, only one in 100 people will be well off financially. Seventy percent of wealthy families lose their wealth by the second generation. More so, around 90% of families lose all wealth by the third generation. So even if you do make a fortune in the most abundant time in history, statistically, your kids or your grandkids will screw it all up. By the end of this video, not only will you understand what it takes to build generational wealth, but you'll also have a game plan for your kids. Buckle up. Okay, you might want to take some notes here. Let's do this.

Welcome to alux.com, the place where future billionaires come to get inspired.

Number one: Buy land. In order for you to understand generational wealth, there's an important distinction we need to get right: personal wealth versus family wealth. For example, $100,000 sitting in your bank account, that's personal wealth. You can go to your nearest coffee shop and buy a coffee with money from that account; it's at your discretion, and it can be depleted. Family wealth, on the other hand, is illiquid most of the time. That means it's hard to change it back into money, or it requires extra steps, and because of this illiquid function, you're less likely to blow through it in case of petty spending.

Land is the ultimate store of value. There's a fixed amount of land on planet Earth, and the fact that you can buy a piece of the earth is mind-blowing because the population is increasing, and the demand for space is always shooting up. The demand for land will always increase too. Buy land and have your children hold on to it; it'll only increase in value. And buy number five on this list will show you what you need to do with that land in case you need money, so you don't have to sell it.

Number two: Buy cash-flowing property. The golden gods of cash-flowing property are apartment rentals, commercial property, or hotels. If you've played Monopoly before, you know how this goes: you buy, you hold, you wait, you cash in. As long as you don't sell the property, and there's a demand for it, it'll forever put food on the table. Here's the easiest recipe for generational wealth: throughout your life, buy at least two rental properties. Now, these won't give you the lifestyle of a king or anything, but you will never go hungry for as long as you live. When your kids become adults, teach them the golden rule as well, so they each buy two rental properties themselves. As long as you steer clear of any dramatic events, like an uninsured rare illness, in only two generations, the family will begin building a portfolio of passive income that will stick around for decades to come.

People will always need homes. Businesses will always need shops to sell their goods, and people will always travel to nice hotels.

Number three: Build an evergreen business. There are some businesses out there that can survive through time; most businesses can’t. You might be killing it on Tik Tok right now, but your grandkids will definitely not be eating from your glow-up videos. So you need to expand. An evergreen business has made money in the past, makes money now, and will make money long after you're gone. You want to have your mind blown? Boeing is a last name. The company was named by William Boeing after himself. Hilton is a last name; so is Ferrari, Lamborghini, Chevrolet, Porsche, Ford—all with the family’s last name. Mercedes-Benz was named after Carl Benz. Burberry, Gucci, Versace, Louis Vuitton, Balenciaga, Fendi, Chanel—all last names. Bosch, Dell, Disney, Dyson, Harley-Davidson, Hewlett-Packard, Forbes, Guinness, Harrods, Jack Daniels, Kellogg, Lavat, Mattel, McDonald's, Ritz Carlton, Marriott, Rolls-Royce—Charles Rolls and Henry Royce. We could do this all day if we wanted to. Almost every brand you touch in a store is someone’s legacy, someone's brainchild that became a business structured in such a way that it survived until now. The family became the brand; the family became the business. The only requirement is to take it seriously and keep innovating and developing your space.

What would your last name sound like as a brand? What business can you start up that your children could carry on the lantern for you? Next Sunday, we're doing a video specifically on evergreen businesses and how to build them, so make sure to subscribe to our channel so you don't miss the notification.

Number four: Buy S&P 500. So many of you have heard these stories: if you invested X amount of money in Apple or Bitcoin in the early days, you would have trillions by now. But the thing is, you're not smart enough to know what the next Apple or the next Bitcoin will be, no matter what the bots in the comment section impersonating us will tell you. But there is still hope. We'd like to introduce you to the ultimate passive investment vehicle. There's actually a way for your money to grow, no matter what. If you look at long-term investment periods, it's called the S&P 500. If you're a subscriber to our channel, you're more than familiar with this, but for anyone who's new here, the S&P 500 bundles the best-performing 500 companies in the US and allows you to invest in all of them at once.

If one company does poorly, it's taken out and replaced with another better-performing one. Since its introduction, the S&P 500 has been the Golden Goose for those interested in building generational wealth. Here's what $100 would look like invested in the S&P 500. And yeah, sure, that time horizon seems big, but here is what you are not seeing: $100,000 invested in the S&P 500 in 2009 would be over $850,000 today—8.5x in 15 years—and this accounts for everything happening in recent history. Since inception, the S&P 500 has returned an average of 6% per year, every year. Warren Buffett, considered by many the greatest investor of all time, hasn't beat the S&P 500 in over a decade. It’s hilarious.

If you want to invest in the S&P 500 for the long run, we recommend Vanguard or Fidelity. And we're not sponsored by them; we have nothing to gain from this recommendation. We simply use Vanguard ourselves. And sure, you could use eToro, Revolut, or other apps to gain exposure to the S&P 500, but who knows if these apps will be around 5 years from now, not to mention a few decades.

Number five: Buy, borrow, die. You wanted to know the secret to generational wealth? Well, this is it: Buy, borrow, die. The strategy is simple, and this might be the most valuable piece of information you'll get in your entire life, so listen carefully. Whether or not you'll build generational wealth boils down to a list of only three things: one—what you buy; two—what you do with it; and three—what happens to it when you die. That's it. But there is a right and a wrong way to do this, so here's how to do it right.

Step one: Buy things that hold and appreciate in value over time. We've got this covered so far; you know what an asset is. Step two, and this is the Golden Nugget that makes all the difference: if you need money, you never sell an asset. Okay? You borrow against it. Let's say you own a piece of land or an apartment and you need money for something—whatever it is. Instead of selling the property, you take out a loan against it. This is how the rich build wealth—they never sell anything. Why? Because you don't have to pay taxes on borrowed money. As long as you don't blow through the money you borrowed on dumb purchases, you can buy more assets that generate more income, pay off the debt to build credit, and they'll allow you to borrow even more money. It's like a financial money hack. So you do this over and over again until you build an abundance of wealth.

But there's a last step to pay attention to: step three—death. Because at some point, you will die. Ideally, you want to leave all of this wealth to your kids and grandkids. But here is the thing: the state doesn't really want you to do that, very much like a Mafia Boss. The state wants its cut, and it wants a big one. It’s called inheritance tax. In the UK, this is an eye-watering 40%, although allowances do exist up to the first 1 million, depending on circumstances. In the US, it's between 17 and 40%, depending on where you live and how rich you are. If you want to build generational wealth, you need to understand how to follow tax regulation by law but minimize the impact it has on your long-term strategy.

At number nine on this list, we'll talk about how to lower your taxes, but until we get there...

Number six: Buy and hold Bitcoin. Now, the goal of this video is to help you build generational wealth. Well, that’s where technology comes into play. Once every 20 years, almost like clockwork, a technological revolution happens. Those who understand it, or at least those with enough guts to put some of their bets on the new kid on the block, usually reap disproportionate rewards. So here's how you should think about it: now we're not saying sell your house and go all in on Bitcoin and crypto. No. But if you're doing okay, why not buy one Bitcoin for your kid? Worst-case scenario, you lose a little bit of money. So what? Best-case scenario (and we think there's more than a decent chance that this will happen) is that one Bitcoin will make your kid a millionaire in less than a decade.

More now than ever, post-COVID, wars are happening everywhere, with inflation at historic highs, with currencies being devalued, and countries facing economic downturns. The world will require a fully separate store of value that's easily portable, scarce, and digitally native. As of the end of 2024, there are approximately 58.9 million millionaires in the world—these are people who got to $1 million in wealth. There will only be 21 million Bitcoin. If every millionaire wanted to buy one Bitcoin, which, by the way, is trading around $65,000 right now, they wouldn’t be able to. If they split all of it evenly between them, each one would only get 0.355. From our perspective, it's an asymmetric risk worth taking. The problem is most people don't understand how to invest in it in the long run.

That's why back in 2020, we launched Bitcoin Essentials. It's the most effective way to get started with crypto. In there, we explain it to you the same way we explain it to our friends and hold your hand from absolute zero to making your first Bitcoin purchase in just a few hours. You can learn everything you need to in simple and easy-to-follow steps. The course is available at alux.com/bitcoin, and if you use our promo code ALUX at checkout, you'll get a 25% discount. If you go through the beginner course and believe you didn't get your money's worth, we'll give you back every penny under our 60-day guarantee.

As the world keeps printing more and more money, effectively stealing purchasing power from everyone, there needs to be something outside of the traditional system. We can't say for certain that Bitcoin will be it, but not having exposure to one of the biggest asymmetric risks of our century just, well, it seems crazy to us.

Number seven: Buy and hold gold, silver, and gemstones. Look, okay, we'll be honest: we're not big fans of precious metals or jewels because we think of them as antiquated, low-tech, and kind of boring. We think there are better stores of value out there, but that's for another video. But you know, we can't deny that these things do serve their role in the generational wealth journey. This is why your ancestors passed down jewelry from one generation to the next—the family heirloom, the gold bracelet. All jewelry is essentially portable wealth. Today, it's become a flex or a status statement, but it served a much more practical role back in the day in case of an emergency. What did they do? Well, they pawned off some of the jewelry—anything but going into debt.

If you're one of the few who thinks the world is coming to an end and will go back to the old days, well, you might want to start buying gold bullion or silver coins sold on teleshopping networks. Outside of its use in computer chips, we don't see gold or silver as something of great utility. People call it "God's money" because all the gold on planet Earth has come from meteors hitting the Earth's crust millions of years ago. But as we become a space-faring civilization, we see no reason why gold would maintain its rare metal status. A 5-year-old is able to understand supply and demand rules. So if all of a sudden we have an abundance of gold available, its value is going down to zero. Just ask the people of the Emirates what happened to the pearl industry when Japan developed artificial pearl farming, and that supply became unlimited.

Number eight: Buy and hold art or other things that people would pay for. Now we'll make this one short because we want to get to the good stuff. Yes, okay, there's value in desire. There's value in collectibles. There's even something called intangible value. Elvis's guitar is more valuable than the exact same guitar model because, well, there are people who value it higher. There's no material difference, but the appeal is real. If your goal is to build multi-generational wealth, you might want to look at things that are still desired decades from now, especially when most Americans now think they need to save over $1.4 million just to retire, according to a Northwest Mutual study. Art is one of those things that stood the test of time. While your Jordan Ones, Yeezys, or random 10,000 NFT collections will be worthless in the future, the impressive thing is that art, as an asset class, has been outperforming the S&P 500 for over 20 years.

But you know, art has also historically being reserved for the rich because of the high cost of entry. Well, until now. Today's sponsor, Masterworks, is making it possible for anyone to invest in art. Their experts purchased blue-chip art like Banksy, Basquiat, and Warhol paintings and break it down into shares. Investors buy those shares just like you would do with a traditional company stock. When the piece of art sells, the profits are distributed to the shareholders, and art has been historically a safe haven investment. Even in the recent market downturn, they sold an $8 million Basquiat painting. Services like Masterworks always have a long waitlist, and traditionally, only high-net-worth individuals were approved. But since you're an AOG subscriber, you get preferential treatment. Go to masterworks.alux or scan the QR code on screen right now to skip that waiting list and invest in blue-chip art starting today.

Number nine: Never stop earning and minimize taxes. Okay, so if the first half of this video was focused on the things to acquire, this second part will be more actionable in terms of what you have to do on a personal level to make sure your wealth keeps growing. So first of all, no matter how much income you get from your investments, if the goal is to build long-term viable wealth, you should never stop earning. Now, you don't have to work a job that makes you miserable just for the sake of a paycheck, if you're already well off. But from personal experience, we can tell you that we humans derive purpose from our work. We like to build things; we like to figure puzzles out. We like helping people.

Although it might not feel like that at first, no matter how much money they inherit, neither you nor your children should ever stop earning. A person who can't earn for themselves cannot hold on to wealth. You need to teach your children the principles of building and maintaining wealth. Once everyone can generate wealth, the question becomes: how do you hold on to it for the long run? That's where you need to learn to speak the language of money or at least get yourself a good accountant that serves as a translator. Incorporate and start deducting your expenses as business expenses. Make your children part of the company. Pay intellectual property rights to them for their ideas as they're helping you to navigate this business in a new climate. Your tax advisor will be able to help you with everything else. The goal is to be 100% legal in all of your efforts. But look, okay, you are under no obligation to pay more tax than you're legally required to.

If you click in the top right corner, we've got a full video dedicated to how rich people pay little to no tax, and so can you. You're going to be shocked at what you can legally get away with.

Number ten: You perpetually compound wealth and knowledge. Now these two go hand in hand. First, you learn, then you remove the L. The more you know, the more mental connections you can make, which translates to higher returns in everything in life—not just wealth. This is why rich people read so damn much. There's money hidden within the pages of the books they read. There's also valuable parenting advice and pathways to living a fulfilling life if you know where to search for them.

In order to build generational wealth, you need to tap into the power of compounding. You already know Albert Einstein's quote: compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it. If you pay attention to it, the differentiator is in your ability to understand how to use compounding to your advantage. If you're smart, you can move earnings from one end into other venues that earn you more money in a perpetual wealth-growing circle. The goal is to never stop compounding both wealth and knowledge.

Unfortunately, though, most people don't know where to get that kind of information that's actionable for their situation. But lucky for you, this is what we do here and why millions of people subscribe to our channel. Our unique way of breaking down money and life made alux the ultimate wealth education resource. And for those interested in taking it to the next level, we strongly recommend the alux app. It's like a dose of distilled knowledge delivered to you in daily 10-minute bits. It's an absolute game-changer used by CEOs, entrepreneurs, creatives, and top managers around the world. The app is available at alux.do/app. All of the money that we made, we reinvested into buying high-level insights from international experts so that you, the subscriber, can get an unfair advantage in life. We spent millions of dollars on the highest quality content possible, and you can access all of it for the price of a good meal. It's not supposed to be cheap, but our long-term subscribers say the app has paid for itself in the first week.

And even better, if you're serious about investing in yourself, scan the QR code on screen right now, and you'll get 25% off the yearly plan. Allow our experts to help you achieve your goals much faster.

Number eleven: Marry well. Now, this is something you might not like hearing, but who you marry is one of the biggest variables when it comes to generational wealth. Divorce without a prenup slices your wealth in half. Who your kids marry is almost as important. Say you've got two kids; you leave your wealth to both of them. One of them gets divorced and that's bye-bye to most of it. This is why back in the day, arranged marriages were the norm. Wealthy families married their kids to each other in order to form financial alliances so that all of their hard work doesn't go to waste.

As a society grows richer, the average number of children per family goes down. Your grandparents used to have like six to eight kids, but you're likely going to have one or two, and most people prefer it this way because, well, they can focus all of their attention, efforts, and money on giving this one child the best shot at life they can get. At this point, it's simple math: if you're an only child, your spouse is an only child; then your marriage will inherit the wealth from both sides of the family. If there's even the slightest doubt in your heart, get a prenup. As for the kids, instead of giving them access to all of your wealth, lock it up in a trust fund that pays them regularly.

Number twelve: Mentor your kids to take over the business or build bigger than you did. Now, we started off this video by telling you that only 30% of family businesses are passed down to a second generation. Now, of course, there are upsides and downsides to them taking over, but they'll have to work anyway, so this is a unique opportunity to create a long-term plan for the family office. Most kids don't want to do it because they don't want to live in their parents' shadow, so they rarely do extraordinary things on their own.

And this is also why most new millionaires are first-generation millionaires. These are people who want it so badly that they'll alter their fate and build wealth despite their humble beginnings. But here's a brutal truth: if your kids don't start off better than you did, you failed somewhere as a parent, whether intentionally or unintentionally. Every parent should want their kids to get a better shot at life than they did, but very few invest in equipping their kids with the real tools for success. Putting food on the table and a roof over their head is the bare minimum, okay? You're their teacher, their mentor, the person who can guide them. Do your job well, and they'll be inspired by your journey, by what you've done in your life, and they'll do the same or better. It all boils down to values.

Number thirteen: Set up a trust. Want your wealth to be protected in time? There are actually financial instruments to do exactly that. They're called trusts, and rich people use them all the time. So trusts are legal entities meant to lock wealth and distribute it to the rightful owner under certain circumstances. There's a variety of ways to structure this, but it ensures that children don't blow through all of your hard work. These trusts can be taxed at substantially lower rates. They can be passed on only after your death, or portions of it can become available if conditions are met. Let's say your child graduates university or earns their first million or has their first child. You can get creative with these stipulations.

And since a trust is a separate legal entity once you die, that trust lives on. So it's also a smart way to cut inheritance tax.

Building on this point, number fourteen: Allow your children to only withdraw no more than 4% per year out of that trust. Now, this is one of those hidden rules only rich people know, and now so will you. The 4% rule is simple. If your wealth grows at a rate between 6 to 10% per year, you should only withdraw half of your earnings. So say you've got $1 million in the bank at a 10% per year; that's $100,000 of additional income. Only take out 40k. That way, the remaining 60k will be added to the total deposit, and you'll get compounding benefits. If you follow this one and only rule for the rest of your wealthy life, you will never be poor again. Withdraw less than you earn and allow the rest to compound. Keep working, keep investing, and growing your principal. The rich don't spend their earned income; they spend the interest on their earned income.

Number fifteen: Write a will. Now, this is already a long video, but this last item is a must because you will die at some point. Okay? Life has a 100% kill rate so far among humans. This entire piece is about multi-generational wealth, so it's incredibly important to have a multi-generational game plan. Here's a perspective that you're not aware of: by the time you die, let's say at 85 years old, your children will be in their 50s or 60s. They'll already have their lives figured out, so the inheritance in the will isn't really for your children; instead, it's for your grandchildren. Your legacy will be determined by how well you instill your children with the right values so that their children will not screw everything up.

It might not matter to most people, but you can do a lot more good in this world if you don’t have to worry about putting food on the table. A will makes the flow of money clear; the more detailed it is, the less likely it is to be challenged. You can make sure that money doesn't end up in the hands of those who don't deserve it, while at the same time making sure everyone you care for is taken care of. But it all boils down to a simple choice, and we want to start a debate in the comments: do you want your children and grandchildren to enjoy the spoils of your hard work, or would you rather have them craft their own destiny and wealth? Let's have it out in the comments, shall we?

And as for those of you, the true Aluxers, still watching our video until the very end, of course, there's a bonus waiting. And that bonus is on children and wealth. So here's where we landed on the topic: your grandchildren will be able to eat off of the moves you make this decade. It's a technological shift; we're on the verge of a massive recession. Inflation is expected to reach all-time highs since they keep printing more money, and everything will get a lot more expensive. It has already begun and will become more and more apparent in the following 18 months.

What you do in the next year and a half will have ripple effects in your life. Ideally, we want our kids to have enough money to do anything they want in life but not enough so they don’t have to do anything at all. We've been around third-generation trust fund kids who are beyond obnoxious—never did anything in their entire lives—and that is not what we want our legacy to be. As a parent, your goal is to open as many doors as you can for your children. Whether or not they walk through those doors should be their own choice, their own effort.

If you disobey this rule, you'll raise unhappy and unfulfilled children. They'll go through life trapped in a cage that is not of their own design. They'll grow up in your shadow, fighting an undefeatable adversary, fail at parenting, and they'll simply give up because they'll never measure up to who you were or the expectations that you've set for them. They'll rebel, and that is how you end up with those fortunes lost. If you're playing the generational wealth game—the long game—you have to make it a priority to mentor not only your kids but your grandkids as well.

It might be shocking to you, but the super-rich who are serious about this actually go to retreats with their children and grandchildren to make sure everyone's on the same page when it comes to the family strategy. This is how the richest family in Florence back in 1450 is still the richest family in Florence today—600 years later. Some families figure it out while others go with whatever happens. Japanese companies like SoftBank have a 300-year plan set in place for their company, while the average Joe barely has a plan until next Wednesday.

We want you to win at this game. This is why you're here, here with us. This is why you're a subscriber. So please focus and put down a game plan for what is to come if your time on this earth will have an impact on the next generation. If your efforts will go on to build a true legacy that impacts those who you care about, write the word "legacy" in the comments. Let's see how many of you will be able to live up to that word. Legacy, my friend, this is our challenge to you.