15 Ways to Create GENERATIONAL WEALTH

By the time 65 rolls around, only one in 100 people will be well off financially. 70% of wealthy families lose their wealth by the second generation and more so around 90% of families lose all wealth by the third generation. So, even if you make a fortune in the most abundant time in history, statistically, you, your kids, or your grandkids will screw it all up. But by the end of this video, not only will you understand what it takes to build generational wealth, but also have a game plan for your kids. Buckle up; you might want to take some notes.

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, one hundred thousand dollars sitting in your bank account is personal wealth. You can go to your nearest coffee shop and buy a coffee with money from that account. It's at your discretion, so it can be depleted.

Family wealth, on the other hand, is illiquid most of the time. That means it's hard to change back into money or requires extra steps. Because of this illiquid function, you're less likely to blow through it in the case of petty spending. Land is the ultimate store of value. There is a fixed amount of land on this planet Earth and the fact that you can buy a piece of the Earth is mind-blowing, considering the population is increasing and demand for space is always shooting up. The demand for land will always increase. Buy land and have your children hold on to it; it'll only increase in value. By number five, we'll 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 will forever put food on your table.

Here's the easiest recipe for generational wealth throughout your life: buy at least two rental properties outside of everything else you buy. Now, these won't give you the lifestyle of a king, but you'll never go hungry for as long as you live. When your kids become adults, teach them the golden rule as well, so they would buy two rental properties too. As long as you stay 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 TikTok right now, but your grandkids won't 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.

Want to have your mind blown? Boeing is a last name; the company was named by William Boeing after himself. Hilton is also a last name; so is Ferrari, Lamborghini, Chevrolet, Porsche, Ford—all with the family last name. Mercedes-Benz was named after Carl Benz. Burberry, in the name of the father, son, in the house of Gucci, Versace, Louis Vuitton, Balenciaga, Fendi, Chanel—all last names. Bosch, Dell, Disney, Dyson, Harley Davidson, Hewlett Packard, Forbes, Guinness, Harrod's, Hennessy, Jack Daniels, Kellogg, Lavazza, Mattel, McDonald's, Ritz Carlton, Marriott, Rolls-Royce—Charles Rolls and Henry Royce.

We could do this all day long—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 in your space. What would your last name sound like as a brand? What business can you start 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 you're subscribed to the channel so you don't miss that notification.

Number four: buy S&P 500. So many of you have heard the stories—if you invested X amount of money in Apple or Bitcoin in the early days, you would have trillions now. But the thing is, you're just not smart enough to know what the next Apple or the next Bitcoin will be, no matter what the bots in the comments 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. Now, if you're a subscriber to our channel, you're more than familiar with this, but for everyone else that's new here, the S&P 500 bundles the best-performing 500 companies in the U.S. and allows you to invest in all of them at the same time.

If one company does poorly, it's taken out and replaced with another good 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, the time horizon seems big, but here's what you're not seeing. One hundred thousand dollars invested in the S&P 500 in 2010 would be over $800,000 today—8x in 12 years! Historically, since its super-slow inception, the S&P has returned an average of six percent per year, every year.

Warren Buffett, considered by many to be the greatest investor of all time, hasn't beat the S&P 500 in over a decade. It's honestly hilarious. Now, if you want to invest in the S&P 500 for the long run, we personally recommend Vanguard or Fidelity. Now, we're not sponsored by them and we don't have anything to gain from this recommendation; we personally use Vanguard.

Now, sure, you can use eToro or other apps to gain exposure to the S&P 500, but who knows if these apps will be around five 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 it 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.

Now, there is a right and 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 one is the golden nugget that makes all the difference: if you need money, you never sell an asset; you borrow against it.

Let's say you own a piece of land or an apartment and you need money for something. Instead of selling the property, you take a loan out 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 that you borrowed on dumb purchases, you can buy more assets that generate more income, pay off the debt to build up 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 is a last step to pay attention to: step three, death. At some point, you will die. Ideally, you want to leave all this wealth to your kids and grandkids. But look, here's the thing: the state doesn't want you to do that, very much like a mafia boss; it wants its cut, and it is a big one. It's called the inheritance tax.

In the UK, it's an eye-watering 40%, although allowances do exempt up to the first 1 million pounds depending on circumstances. In the United States, it's between 17 and 40 percent depending on where you live and how rich you are. So if you want to build generational wealth, you need to understand how to follow tax regulations 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.

The goal of this video is to help you build generational wealth. Well, that's where technology comes into play. Once every 20 years or so, almost like clockwork, a technological revolution happens. Those who understand it, or at least have enough guts to put some of their bets on the new kid on the block, usually reap disproportionate rewards.

Here's how you should be thinking about it: we are not saying sell your house and go all in on Bitcoin and crypto, but if you're doing okay, why not buy one Bitcoin for your kid? Worst case scenario, you lose a bit of money; so what? Best case scenario—and we think there's more than a decent chance that this will happen—that to one Bitcoin will make you or your kid a millionaire in less than a decade.

Here's why we think that will work: more now than ever, with COVID and the war happening in Ukraine, with inflation at historic highs, with currencies being devalued and countries facing economic downturns, the world is going to require a fully separate store of value that's easily portable, scarce, and digitally native.

As of the end of 2021, there are approximately 56.1 million millionaires in the world; these are people who got to $1 million in wealth. Well, there are only going to be 21 million Bitcoin. If every millionaire wanted to buy one Bitcoin, which, by the way, is trading at under $40,000 right now, they wouldn't be able to. If they split all of it evenly between them, each would only get 0.375.

From our perspective, it's an asymmetric risk worth taking. The problem is most people don't understand how to invest in it for the long run. That's why, in 2020, we launched Bitcoin Essentials. It's the most effective way to get started with crypto. We explain it the 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 in simple and easy-to-follow steps.

The course is available at alux.com/bitcoin, and if you use the promo code ALUXER 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.

And for the more advanced bunch, we're considering a new course to include Ethereum, DeFi, how to create an NFT project that has utility tied in, crypto indexes, DAOs, and much more—which will be called Crypto Complete. But there's no release date on that yet. Personally, a third of our net worth is invested in Bitcoin, Ethereum, and a few crypto indexes—not because we bought it cheap and now it's worth a lot, but because we're actively putting money into the industry.

The other two-thirds are split between real estate and income-generating businesses, so everything we talk about here is from our own personal experience.

Number seven: buy and hold gold, silver, and gemstones. Okay, look, we'll be honest; we're not big fans of precious metals or jewels because, well, we think of them as antiquated, low-tech, and boring. We think there are better stores of value out there, but that's for another video. Yet, they 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 portable wealth. Today, it's become a sort of flex or status statement, but it did serve a much more practical role back in the day in case of any emergency. What did they do? They pawned off some of the jewelry—anything but go into debt.

If you are 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 some gold bullion or silver coins sold on the teleshopping networks. Outside of its use in computer chips, we don't really see gold or silver as something of great utility. People call it God's money because all the gold on the planet 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 five-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 will go to zero. Just ask the people in the Emirates what happened to the pearl industry when Japan developed artificial pearl farming and the supply became unlimited.

Number eight: buy and hold art or other things that people would pay for. We'll make this one short because we want to get to the good stuff. Yes, there's a 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 there are people who value it higher.

There's no material difference, but the appeal is real. Art is one of the last unregulated markets in the world. This is why the NFT space blew up the way it did. If your goal is to build multi-generational wealth, you might want to look at things that will still be desired decades from now. Art is one of those things that stood the test of time, while your Jordan ones, Yeezys, or random ten thousand NFT collections might end up suffering the same fate as Beanie Babies.

Number nine: never stop earning and minimize taxes. Okay, so the first half of this video was focused on 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 wealth keeps growing. 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.

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 look, from personal experience, we can tell you that we humans derive purpose from work. We like to build things, to figure out puzzles. We like helping people.

Although it might not feel like it at first, no matter how much money they inherit, your children should never 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 is able to 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 the business in a new climate.

Your tax advisor will be able to help you with everything. Your goal is to be 100% legal in all of your efforts. But look, you're under no obligation to pay more tax than you are legally required. If you click in the top right corner, we have 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. These two go hand in hand. First you learn, then you remove the 'l.' The more you know, the more mental connections you're able to make, which will translate into higher returns in everything in life—not just in 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. And 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 avenues that earn you money in a perpetual wealth-growing circle.

The goal is to never stop compounding both wealth and knowledge. Unfortunately, most people don't know where to get the kind of information that's actionable for their situation, but lucky for you, that's exactly what we do here. We break things down so you understand how they work money-wise, which has made Alux the ultimate wealth education resource 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 a game changer! The app is available at alux.com/app or just search Alux in either app store. Every dollar we earn from the app is going back into its development—the content but also a good portion to charitable causes so we all have a positive impact.

People are loving it, with over 30,000 people downloading the app already.

Number eleven: marry well. This is one 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. Have two kids and leave your wealth to both of them, but one of them gets divorced—bye-bye most of it.

This is why back in the day, arranged marriages were the norm. Healthy families married their kids 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 six to eight kids, but you're likely only going to have one or two, and most people prefer it this way because 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 and your spouse is an only child, then your marriage will inherit the wealth from both sides of the family. And let's say you only have one child yourselves who will marry someone who's also a single child. In this case, theoretically, the wealth in your bloodline should only increase.

Number twelve: mentor your kids to take over the business or build bigger than you did. We started off by telling you that only 30 percent of family businesses are passed down to a second generation. It sucks, but it's the truth. It's also why most new millionaires are first-generation millionaires. These are people who want it so bad they will alter their fate and build wealth despite their humble beginnings.

Here's the 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 their table and a roof over their head is the bare minimum. 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 will go on to do the same.

It all boils down to values. Want the wealth to be protected in time? They're called trusts, and rich people use them all the time. Trusts are legal entities meant to lock wealth and distribute it to the rightful owner under certain circumstances. Now, there's a variety of ways you can 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 after your death, or portions of it can become available if conditions are met. Let's say if your child graduates university or earns their first million or has their first child; you can get creative with those conditions.

Number fourteen: allow children to only withdraw no more than 5% per year out of the trust. This is one of those hidden rules only rich people know, and now so will you. The 5% rule is simple: if your wealth grows at a rate between six to ten percent per year, you should only withdraw half of the earnings.

You have more than one million in the bank at 10% per year—that's $100K of additional income. Only take out $50K. That way, the remaining $50K will be added to the total deposit, and you will get compounding benefits. If you follow only this rule for the rest of your wealthy life, you will never be poor again.

Less than you earn and allow the rest to compound. You will die—so far, among humans, life has a 100% kill rate. This entire piece is about multi-generational wealth, so it's incredibly important for you to have a multi-generation game plan.

Here's a perspective you might not be aware of: by the time you die—let's say at 85 years old—your children will be in their 50s or 60s. They will already have their lives figured out, so the inheritance in your 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 won't 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 more clear. 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 you know, we actually want to start a debate on this 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 take this to the comments, shall we? Now, as for those of you, the true Aluxers still watching our videos until the very end; of course there's a bonus waiting. And today, that bonus is on children and wealth. Here's where we landed on this topic: your grandchildren will be able to eat off the moves you make this decade.

It's a technological shift. We're on the verge of a massive recession that's already begun, which 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. They never had to do anything their entire lives, and that's not what we want our legacy to be. As a parent, your goal is to open up as many doors as you can for your children. Whether or not they walk through them should be their own choice and their own effort.

If you disobey this rule, you'll raise unhappy and unfulfilled children. They will 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 set for them. They will rebel, and that's how we end up with those fortunes lost.

If you're playing the generational wealth game, you have to make it a priority to mentor not only your kids but your grandkids as well. This might be shocking to you, but the super-rich who are serious about this actually go on retreats with their children and grandchildren to make sure everyone is on the same page when it comes to the family strategy.

This is how the richest family in Florence 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 such as 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; that's why you're here; that's why you're a subscriber. So please focus and put down a game plan for what's to come. If your time on this earth will have an impact on the next generation, if your efforts will go toward building a true legacy that impacts those you care about, write the word “legacy” in the comments.

Let's see how many of you will be able to live up to the word legacy; that's our challenge to you. Thank you for watching this video, Aluxers! If you found it valuable, consider subscribing to our channel and joining our awesome community. And if you're still hungry for more, we hand-picked this video for you to watch next or head over to our website for more amazing content. See you tomorrow!