Property investments provide the perfect opportunity to reflect on how to protect and provide for our loved ones. A wonderful way of achieving this is by building generational wealth through property investments that follow a strategic plan. We’ll unpack the meaning of “generational wealth.” Then we’ll explore the meaning of how to create multi-generational wealth and its benefits for your family across the generations, and look into generational wealth management.
Unlike traditional retirement funds and annuities, properties are physical assets that appreciate as years go by. This will mean, if you pursue a property portfolio, you can leave a legacy for your loved ones and ensure they are financially secure for future generations.
What is the meaning of “generational wealth?”
Before dipping your toes into property investment strategies, you must understand the meaning of generational wealth. At its centre, generational wealth refers to the assets and financial resources you pass down from generation to generation. The assets can include stocks, businesses, and property. When examining these assets, property investment stands out as a robust and stable route to wealth accumulation.
The goal of generational wealth management is to secure the financial freedom for generations to come after your legacy has been left to them. In this way, future generations in your bloodline will have a significant financial advantage. This means they can attend prestigious schools and tertiary institutions, embark on business ventures and enjoy financial freedom and security.
Leaving a Legacy: share your love with relatives left behind!
Leaving a legacy via your property investment portfolio is not just about heirs benefiting financially, it’s about your loved ones being able to enjoy opportunities they may not have been able to afford alone. It gives them financial security in their lifetime to pass on, in turn, to the next generation.
Many people aim to equip their children and grandchildren with the opportunity to enjoy a better life with great prospects and without financial constraints. Buy-to-let property owners pass on their properties to their heirs, who can grow their property portfolio into an empire!
As a retiree, property investment serves a dual purpose. Your rental properties generate a passive income, securing your retirement needs and making you independent of your adult children. At the same time, these properties appreciate in value, and they will benefit future generations tremendously! The dual functionality of property investment makes it a perfect opportunity for retirees to secure their retirement, financially, and their loved ones’ futures.
What are the perks of leaving a legacy?
Generational wealth can have a powerful impact on future generations, both financially and emotionally. It is also important because it can do the following:
- Provide long-term financial security for your family
- Create opportunities for your children and beyond
- Equip your children for the future
- Promote economic growth
- Open doors for your children to pursue their dreams
- Teach your children financial responsibility” (Source)
Leaving behind a property portfolio to inherit is a legacy and a true act of love, transforming the lives of your loved ones for many years after you are gone!
How does IGrow aid the creation of generational wealth?
IGrow Wealth Investments provides our investor clients with a strategic approach to creating multi-generational wealth via property investment. We aim to offer guidance to investors so they can move seamlessly through the world of property acquisition and property management.
This is how IGrow’s team makes this possible:
- Wealth strategists/Property investment strategists: conduct an assessment of your financial goals and create a tailor-made property investment strategy, tying together your wealth-building aims.
- Bond Originators: secure optimal financing options, which is critical in the overall scheme of things. IGrow’s bond originators are affiliated with major South African financial banks and institutions. They will negotiate on your behalf to secure competitive interest rates and loan terms.
- Tax Consultants: offer well-managed tax plan guidance that is critical for efficient generational wealth management.
- Property Portfolio Planners: assist you in structuring as well as managing your property portfolio. This ensures a reliable capital growth pattern and means you can hand down your wealth to future generations. IGrow Wealth Investments’ strategy emphasises refinancing. In refinancing existing properties within your portfolio, you can unlock extra capital. This means you can make further property purchases, accumulating into more assets within your property portfolio.
- IGrow Trusts help you build the trust structures required to protect and pass on your wealth to future generations tax free in your estate planning.
Generational wealth management to ensure future generations can manage your property portfolio effectively
“Good money management is important to building generational wealth. It involves educating yourself and your family members about personal finance concepts, such as budgeting, saving and investment strategies. By sharing your knowledge with your kids and grandkids, you can help them develop good financial habits early on and make smart decisions about their money as they grow up.” (Source)
Generational wealth management is a key aspect whereby, in educating those you leave behind, they can continue to manage your property portfolio well, which secures their financial future.
The pros and cons of leaving a legacy via property investment
It’s important to compare the pros and cons of leaving a legacy through property investment, both for retirees and their heirs.
| The pros of leaving a legacy via property investment |
| For Retirees | For Heirs |
| PROS | PROS |
| Passive rental income is overseen by IGrow’s property management team (which covers tenant management and property maintenance). | Immediate & ongoing monthly rental income with IGrow handling tenants. |
| Property value appreciation over the years under IGrow’s guidance. | Simplified inheritance process under IGrow’s legal team and estate planning services. |
| Tax planning guidance to minimise taxes on properties. | Refinancing options through IGrow Home Loans bond originators. |
| Portfolio expansion: refinancing advice by IGrow for future property purchases. | Flexible asset utilisation: for rental, sale, or reinvestment purposes. |
| The cons of leaving a legacy via property investment |
| For Retirees | For Heirs |
| CONS | CONS |
| Ongoing property management is required which incurs costs. | Potential financial liabilities: inherited bond repayment fees (though with correct planning, the trust is liable for expenses, not the people involved, and the income of the property covers these expenses). |
| Market fluctuations can impact property value. | Tax implications concerning inheritance – which can be removed through correct trust planning. |
| Less liquidity than cash investments. | Potential deceased relative estate complexities (including properties) when tying up the estate depending on the deceased relative’s Will specifications. (again, a trust eliminates these issues, as nothing is inherited – the trust continues as normal). |
IGrow Trusts smooth over the inheritance process
IGrow strongly recommends property portfolios are owned not by individuals, but by companies held in trusts. With the correct trust and estate planning, there is no estate duty payable, or hassle in handing over of properties. Your loved ones would be beneficiaries of the trust, and when you pass on, they simply continue to be beneficiaries – there are no inheritance tax or special executor fees to worry about!
Assets are not frozen when placed in a trust, making winding up an estate a breeze
There is also no freezing of assets while the estate is wound up. They can continue to draw an income from the properties in the portfolio, or access equity through refinancing, within the rules of the trust.
Your heirs can seek out IGrow’s assistance with these services:
- Financial assessment and Bond Review: our property investment strategists and bond originators will assess the existing bonds in place on the inherited properties. They can re-structure the bond repayment plans of each property. This is in order to approach financial obligations that were handed down in the best possible way.
- Refinancing options: our bond originators’ advice alongside our property portfolio planners’ guidance will help heirs who wish to refinance their trust’s properties. This will mean better interest rates will be incorporated in the Bonds’ terms and the aim will be to free up additional capital for further property investments.
- Portfolio optimisation guidance: our property portfolio planners will evaluate the inherited assets and pinpoint opportunities for potential growth or restructuring. This will be to meet the heirs’ financial goals.
- Estate tax and financial planning: our tax consultants, property portfolio planners and trust specialists will offer you guidance to manage estate taxes, decrease liabilities, and set up trusts, if this isn’t already in place, for tax efficiency purposes. View one of our latest blogs on the benefits of placing your properties within your portfolio, into a trust: “Why Trusts Are Essential For Property Investors”.
- Property management: our rental managers offer you comprehensive property management services. This ensures a steady rental income through their tenant management process and they’ll keep your properties in tip-top condition. The IGrow rental management team will oversee the efficient maintenance of all the properties within the portfolio.
Key Takeaways
- Generational wealth: encompasses the passing down of assets, in various forms, including property, to ensure financial stability and the safety of future generations. You have learned how to create multi-generational wealth by passing down your wealth and property portfolio to multiple generations in your family. Leaving this legacy provides wealth accumulation through passive rental income for relatives, into the future.
- Generational wealth management: entails teaching your kids and grandkids about managing money and how to effectively run your property potrfolio within the correct structures of companies and trusts. They will be equipped to look after it financially when you are no longer there.
- Property investment is a solution: this form of investment ensures a safe pathway to wealth accumulation and property transfers to your heirs.
- IGrow’s expert support and guidance: from wealth strategists to property management, IGrow has you covered with end-to-end services. We facilitate property investment and inheritance procedures seamlessly, so the heir doesn’t feel overwhelmed or face any major obstacles alone.
- Pros and Cons: property investments offer an array of benefits, but it’s also important to prepare for potential obstacles and to plan ahead with the IGrow team’s guidance, particularly when it comes to tax and estate planning.
- Proactive strategic planning: timely and well-informed investment decisions will contribute positively to the financial security of your relatives, across generations.
Conclusion
Creating generational wealth through the path of property investments is a powerful and trusted tool for the long-term financial security of your loved ones. By coming to terms with the nuances of generational wealth management and by leveraging the IGrow Wealth Investments team’s expertise, you will be able to leave a lasting legacy!
It’s time to take the proactive steps necessary to keep your family’s future financially secure. By partnering with IGrow and investing in property, you are paving the way for boundless financial prosperity and well-being.
IGrow Wealth aims to help ordinary South Africans achieve financial freedom through investing in property. Our comprehensive services and member support, combined with the property investing knowledge of founder Jacques Fouché, has made IGrow the number one property investment company in South Africa.” -IGrow Wealth Investments Team
