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Wealth Protection (Part Two): 3 Multi-Generational Assets (no stocks)

“I was born into wealth and there was nothing I could do about it. It was there like food or air.” 

 

~ David Rockefeller

 

Written by Bryan Lutz, Editor at Dollarcollapse.com:

 

Another eye-opening characteristic of families that hold multi-generational wealth is that they do not generally hold stocks or bonds.

 

We are not talking about millionaires, or multi-millionaires here. They usually diversify in stock, bonds, real estate, and cash. We are talking about long-term investments beyond two generations.

 

Those families hold three multi-generational assets.

 

One of them is the US Dollar – cash.

 

Here are the other two:

 

1. Income-Producing Real Estate

 

Now, you would think that when it comes to real estate, the ultra-rich own a ton of farmland, or their own private islands, or a mansion in the South of France, but that is not the case.

 

They may own a mansion somewhere, but these places are usually used as gathering grounds, or meeting places to retell family stories and perpetuate values.

 

What they are interested in is consistently purchasing income-producing property.

 

For example, and this is not “sexy,” they own commercial property, multi-family housing, industrial, and retail space. And let’s not forget student housing (which is constantly needed and paid for either by government student loans, or other wealthy families), and storage facilities(also needed by many, and rising in demand as the cost of housing rises).
Here are three reasons why they invest in income producing properties…

 

First, you only pay taxes on cash flow, which can be mitigated by debt.

 

Second, income-producing properties act as an inflation hedge.

 

Third, it is easier to pass onto the next generation without being too costly.

 

2. Private Business Investment / Ownership 

 

Sometimes, families with multi-generational wealth choose to keep the business that harvested their riches. Sometimes, they choose to sell. In any event, private business investment is something those with larger amounts of cash will always be searching for.

 

Whether this is investing in a start-up, or investing in a business that needs cash investment in order to scale, they will want to invest in private businesses.

 

Why do they do this?

 

Because a 10% investment means 10% of the profits.

 

This works a little differently if you are investing in, for example, a gold / silver exploration company. Sometimes, once an explorer has finished defining its potential economic value a bigger mining company, a producer, comes in and buys up shares at sometimes 5x, or 10x the share price.

 

It takes patience, but it’s one of the possibilities to make money in that sector. Aside from trading high and lows, and grabbing dividends that is.

 

The other option is to own your own private family business in any other industry, and continue expanding from there.

 

3. Cash – US Dollars

 

Here’s why families with multi-generational wealth would be concerned with the state of the US dollar.

 

The US Dollar is the most tradable asset in the world. It is real liquidity. Most countries will accept it. And many hold US bonds to stabilize their Central Banking system.

 

For example, in my home country of Canada, our Central Bank sold our last ounce of gold back 2003. Sad, I know, but this is the way the world works.

 

When it comes to currency, and owning real liquidity in markets, the US Dollar is king.

 

The more USDs a family, or person holds when a market crashes, the more they’ll have available to swoop in and buy up whatever assets (income-producing real estate, and private businesses) they can find.

 

When the value of the USD, your liquidity starts being questioned, that’s when it’s time to worry. That’s when it might be time to invest in more sustainable assets…

 

Learn about farming, develop tradable skills, purchasing asset producing equipment (or equipment that supports high-level tradable skills).

 

Some families even choose to purchase farmland, while a part of the family runs the farm.

 

These are worth more than any failing currency:

 

Income-producing real estate, businesses that serve basic needs, farmland / farming, equipment / manufacturing equipment, and high-level tradable skills.

 

Some may also choose to hold gold. Or if they know the mining industry inside and out like Billionaire Eric Sprott, then they may elect to find the majority of their private business profits in gold and silver mining companies, or explorers.

 

There is lots of profit to be found if you have time and energy to put into learning this industry, and you have some capital to speculate with.

 

And when the world’s reserve currency, those are some things to think about.

 

Anyway, those are three multi-generational assets, and even what the rich do to protect their wealth in spite of a failing currency.

 

Please, let me know if that’s helpful for you.

 

That’s all I have to share for now.

 

Take care.

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