The One Fact That Changes Everything
The term Generational Wealth is a bit overused these days by gurus selling courses, but despite that, this term still has profound meaning to me.
I want to pass on my life’s work for the benefit of my family.
But the thing is… I don’t want my wealth to last for only 1 generation. I want it to last forever.
After selling one of my companies many years ago, I was talking about this Generational Wealth concept with my wife. And as we looked at our portfolio, we quickly realized that our investment allocations were in complete misalignment with our goal.
Why? I was over-allocated in cash.
A mentor of mine once showed me how $1.00 depreciates by 97% over 100 years.
Let me restate that because this is the fact that changed everything for me.
Every $1.00 you pass along to your family will only be worth 3 pennies 100 years from now.
I’d call that a kick below the belt for anyone’s generational wealth plans.
Cash is an asset, but its value is eroded by inflation.
Real estate is an asset, and its value is increased by inflation.
So every $1.00 of real estate value that you pass along to your family will likely be worth $19.22.