Don is CEO of DLP Real Estate Capital, a leader in single/multi-family RE brokerage, investment/asset/property mgt., construction, lending.

It’s one thing to dream about striking it rich, but quite another to steadily create and grow your wealth through hard work and discipline over many years. So, why do so many — even the very successful — leave their legacy to chance hoping it will survive them?

Despite the significant effort needed to build a fortune, it takes surprisingly little for it to slip away and even less for each generation after you. More than money, what’s lost are the worthwhile things you can achieve when there’s wealth to pass on and a plan for keeping it over multiple generations.

Living And Leaving A Legacy

At the start of my career, I was focused first on survival, leading DLP through and out of the Great Recession. Then, it was about business success and growth. My focus has now turned more toward making an impact and leaving a legacy for my family and our causes. Once I began really focusing on that long game — the future of my family and our world, I realized all that generational wealth can afford someone and how strategic real estate investments can help make those dreams a reality.

Building And Protecting Your Wealth

For all that generational wealth can do, there are significant headwinds that can get in the way of achieving it. The increased cost of living is an impediment that 47% of Americans told TD Ameritrade was their biggest threat to financial security, and that was before the pandemic. Despite the challenges, it’s still possible to build up wealth and pass it on to your heirs as long as you have a concrete plan to maximize every dollar you earn by saving and investing through smart strategies:

• Evaluate your portfolio. Before making a purchase, evaluate your portfolio from a number of risk perspectives, such as volatility, losses and liquidity. Diversifying your investments over a range of investment types can help protect them from risk, and after this assessment, you can determine whether real estate would be a natural counterweight to a portfolio of stocks and bonds.

• Declare your values before making an investment. Making a list of the principles for how you want to live your life is as important as setting concrete financial goals. When it’s time to make big investment decisions, your written values provide a compass for keeping you on track. For example, you won’t be tempted to buy a more expensive home than you can afford. Passing your values down along with your wealth ensures a guide for future generations. 

• Don’t invest beyond your means. Total U.S. credit card debt in 2020 was a staggering $756 billion, and 12 million new credit cards have been opened by U.S. consumers since 2019. The average credit card balance was $5,315 in 2020. People tend to spend more than they make, one of the biggest impediments to wealth-building. No matter your income level, creating and following a realistic budget when considering a property investment that’s based on your current assets and liabilities ensures there’s money to save. Most experts agree that your mortgage should take up no more than 28% of your gross monthly income. Less is even better. 

• Let your wealth work for you. Your money should work hard. That means investing your wealth in growth and income-producing assets, such as additional real estate. You don’t need to know how to renovate or manage a rental property to enjoy the returns of investing. When you invest in private real estate funds, it requires no more work than investing in a mutual fund, and often with greater reward potential.

• Consider tax efficiency when selecting investments. Often overlooked, simple tax planning can result in millions in savings from income tax, estate tax and gift tax. In addition to utilizing trusts, qualified accounts and other estate planning and sheltering strategies, choosing inherently tax-efficient investments can make a tremendous difference in growing wealth. For example, investment real estate offers several tax benefits, including deductions and depreciation. Plus, sale proceeds are taxed at capital gains rates and not at income tax rates; typically the higher of the two.  

• Be a responsible steward. We are all stewards of the blessings that have been provided to us and being a great steward of our wealth is a responsibility. We must also teach stewardship to those we plan to leave our legacy to by discussing and sharing legacy goals with them, starting early and then later on explaining your financial position, goals and plan so they understand their own roles.

 No Reason To Chance Your Legacy

Choose to live your legacy and leave one that outlasts you for generations. Finding a peer group can make a difference. The earlier you begin to focus on your legacy, the greater impact you will make for generations to come.

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