How to build wealth across generations

Published: October 20, 2021 at 8:24 am

Let us discuss an interesting question received on our YouTube channel. “How can we build wealth that lasts generations?”. This is a topic close to my heart not because I desire to do so but because I have seen wealth erode in my family from one generation to another and I would like to do everything to prevent that going forward.

My great grandfather probably led an upper-middle-class life in the 1940s and ’50s but later on, my families social station slipped down gradually and stayed firmly rooted in the middle class since the 1970s.

In the late eighties, we had to sell our huge bungalow in the heart of Mylapore in Chennai to relocate to flats. The emotional scar of that move affected my father (who was born in that house) quite a bit and I cannot get over it to this day.

That is when I realised that one generation should earn more than the previous generation to try and hold on to what was bequeathed to us.

It is only because of the sacrifices of my parents that I was able to spend 12 years after school educating myself; qualifying myself and increasing my ability to earn more. Due to the untimely demise of my father I was forced to learn money management, appreciate equity investing. It is only because of this my family has been able to move back up the social ladder.


When we think about wealth across generations, we immediately think of a family business handed down from generation to generation. However, that is not possible if we are salaried. So how can the salaried build wealth across generations?

There are two minimum requirements. From one generation to another:

  1. The parents should be financially independent. This implies they will have to invest right from an early age.
  2. The children should be more qualified; more skilled and should earn more than their parents.

Even if actual networth does not get transferred from one generation to another, at least the social station will not get eroded.

If we as parents invest a good amount of our net worth in equity, we have a reasonable chance of financial independence in retirement. This will also encourage our children and their children to do the same.

With luck, we might be able to remain invested in equity all through our lives and hand it down to our children and them to theirs. All this would require patience; discipline and dedication.

We could also try and encourage entrepreneurship in our children but that is a double-edged sword!

In summary, we must have a long-term view of our net worth – a 30-year or 40-year plan. Then we will not worry about consumerist trivialities like credit card reward points and cashback. Also, see: Want To Get Rich? Write Yourself A One Crore Cheque!

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