Anyone Can Build Generational Wealth If They Try Hard Enough. Right?
Building generational wealth with existing generational wealth is certainly the easier way to do it.
Recently I was talking with my brother about generational wealth, and he offered this definition:
“Generational wealth is all about an individual (parent) building something and passing it onto someone else, likely with the intention that this successor would be able to start at a more progressed place in life.”
Well said, brother.
A driving force behind my passion for investing is the concept of generational wealth. I love how people are building generational wealth for themselves who didn’t have it before, and how they choose to help their family and community thrive.
It’s certainly possible to build wealth from nothing, but it’s so much easier to build on top of money that already exists. And as that wealth grows exponentially, it begs the question: does everyone have equal access and opportunity to build that kind of wealth?
I don’t believe it has anything to do with the coffee you drink or the toast that you eat. I also don’t believe that certain demographics are naturally bad with money.
I do believe that building generational wealth can be complicated and difficult to achieve. I also believe that the opportunity is affected by various circumstances.
And I strongly believe that, if we don’t have honest, open, and transparent conversations about building wealth (and having it), we do a disservice to everyone.
So as someone who benefits from generational wealth, I want to be transparent about it before I continue sharing investment advice.
The First Generation of Wealth
My family has the kind of money that inspired people to move to the San Francisco Bay Area. My dad joined a startup called Yahoo in their early years and, after selling his stock options, was able to retire at the end of 1999. He was 39 years old and has never once wanted to work again.
Because my dad secured a job at a promising company, my mom stayed at home to raise us, and because they made good choices with his stock options, my parents can live comfortably. Meanwhile, my brother and I can make life decisions knowing that, if something goes seriously wrong, we have a safety net.
And that’s exactly the purpose of generational wealth: to help the next generation struggle less. My parents had to make decisions based on how they would manage to take care of their parents as well as raise a family of their own. They couldn’t study whatever or wherever they wanted, but they wanted to give me and my brother that freedom.
Fast forward a couple decades: I married a U.S. Army officer, he was assigned to a base in Germany, he got out of the military, and we moved to the Netherlands so that he could get his master’s degree.
As a freelance copywriter (my third career path over the past 10 years), I haven’t made an excessive amount of money. In fact, I’ve barely made enough money to put away a few hundred dollars in savings.
So when my family asked what I wanted for my most recent birthday, I said I wanted money to invest. I received a total of $1,150 and invested just over $500 in Flower Turbines. I spent the rest on a business coach, considering it an investment in myself.
Other than gifts, I don’t have much capital floating around. I can’t meet the $3,000 minimum that most investment banks or firms require. Combined with my husband, we have enough cushion to live modestly on my (growing) income. But we aren’t accredited.
So now, as I share my investing journey and how I choose to invest, you have more information about how I’m making decisions.
Whose Responsibility Is It to Educate the Next Generation about Building Wealth?
On the Techish podcast, Michael and Abadesi recently discussed the racial and economic disadvantages that many people (especially Black people) face when it comes to “financial literacy.” And it has nothing to do with knowing where money comes from or whether you’re good at math.
Most public schools don’t offer home economics or personal finance classes. Modern society expects parents to teach their kids about money. But if parents don’t have that knowledge on building personal wealth, how are they supposed to pass it on to the next generation?
People with (wealthy) networks rely on existing connections to find investment opportunities, which keeps the wealth, trust, and information within those circles for generations. Black people have not been welcomed into those networks, let alone had increased access to them until recently.
And even if they can get a foot in the door, Black entrepreneurs struggle to secure funding at the frequency and rates that their white counterparts do. They may receive more capital initially from friends and family than white founders, but their options are limited when it comes to bank loans or VC funding.
They may do all the “right” things like graduate from college, budget their spending, open a savings account, and pay off their credit cards, but if they can’t get warm introductions or even pitch to people who think like them, the options to build truly transformational wealth are limited.
As long as money is a taboo subject and we aren’t open about why some get more than others, generational wealth - and the opportunity to achieve it - will continue to stay within a small percentage of hands.
And that brings me back to why I’m writing this edition of Sterling Invests…Eventually. If I want to disrupt the world of investing by making it more accessible, then I need to be open and honest about my relationship with this world.
And so should you.
Things I Found Informative and Interesting
I attended a free AMA with Mac the VC and Gale Wilkinson - if you want to become an investor (Angel or VC), follow them to learn about the next one!
Did you know that Petco has been privately owned until January 2021? They just had their IPO raise…or something
I’m trying to take Wes Kao’s advice to heart: worry less
Final Thoughts - For Now
When I first drafted this edition of Sterling Invests…Eventually, I was also exploring my feelings about why talking about money feels taboo. I didn’t want to dive into my personal story because I didn’t want this to be an effusively apologetic post about privilege. I want it to offer value.
But there’s so much to unwrap. Ultimately, I decided to break it into two separate pieces: one about generational wealth (this one), and another about how we talk about money (the next one).
If we want to see equitable access to building generational wealth, we have to get over the discomfort we feel when it comes to talking about money. I hope you’re ready for this journey.
If you know someone who would enjoy this article, or someone you’d enjoy talking about it with, feel free to share!
And thanks to all the good folks at Compound Writing for helping me work through this edition, especially Lyle, Steven, Richie, Doc, Nick, Ryan, Abu, Josh, Dan, and Yishi 🙏
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