Alternative Investments and Generational Wealth

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fiby41
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Joined: Tue Jan 13, 2015 8:09 am
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Alternative Investments and Generational Wealth

Post by fiby41 »

Generational Wealth:
What is your opinion on having a trust fund, leaving an inheritance, creating generation wealth?

Suppose your total savings increase by 30% via your salary in a year but you are getting 15% or 10% or 5% capital appreciation during the same time so wouldn't it make sense to only work in the years when you don't expect to gain half or third or sixth of the increase in savings you would have had anyway without working.

Trying to list all types of Alternative Investments that come to mind. Feel free to add:

1. Invoice Discounting
2. Private Equity
3. Venture Capital/Angel Investing/eary stage/seed start-up funding
4. Commercial papper/short-term un-secured corporate bonds
5. G-secs (government securities)/gilt bonds/state/center bonds
6. Un-listed bonds
7. Leasing: here it is done via LLPs. You become a part of an LLP that lease out property, plant or equipment to companies that want to use it but not own them outright
8. Peer-to-peer lending
9. Revenue Based Financing
10. Buying rights to digital intelluctual property(sound tracks of movies) and earning royalties from distribution
11. Fractional Real Estate

bostonimproper
Posts: 581
Joined: Sun Jul 01, 2018 11:45 am

Re: Alternative Investments and Generational Wealth

Post by bostonimproper »

These seem like two very different topics?

We’ll almost certainly have a decent amount of financial assets for our kids to inherit when the time comes, though in general I’m more in favor of making sure they are set up while they are young (college fund, down payment for a home, etc) so that they can benefit from financial stability throughout their lives, not just when we kick the bucket.

In terms of alternative investments, have tried P2P lending (would not recommend) and have a moderate crypto allocation. I don’t really think of government and corporate bonds to be alternative investments. At some point we had some allocation in munis, but don’t any longer. We will probably dabble in private equity and seed funding (I guess we already gave some of this through exercised options from previous employers), but I see that more as a “how do I want to use my money to shape the world” sort of thing more than an investment.

The Old Man
Posts: 503
Joined: Sat Jun 30, 2012 5:55 pm

Re: Alternative Investments and Generational Wealth

Post by The Old Man »

Generational Wealth and Alternative Investments are two different questions.

Generational Wealth: Due to the massive conflicts of interest that exist in the financial services industry the approach these days is to use a family office to manage the generational wealth. You typically need a minimum of $100 million to play this game. You can also go with what is called a multi-family office if you have a smaller amount say $30 million. As the name implies a multi-family office manages the fortunes of several families.

If you have say a middle-class fortune - $5 million or less - then you have to do it the old-fashioned way by using estate planning techniques (trusts, LLC, wills, etc) to transfer your wealth to the next generation. The next generation then takes responsibility for managing their share of the fortune.

I have a trust and if I am lucky I will be leaving an inheritance. If I am unlucky then my fortune will be used up dealing with life issues. The heirs will assume the responsibility for managing their inheritance if there is any.

PhoneticNachos
Posts: 43
Joined: Thu Jan 26, 2023 9:17 pm
Location: Jacksonville, FL

Re: Alternative Investments and Generational Wealth

Post by PhoneticNachos »

I know one of the families in my family on my father's side, that is probably the wealthiest who live in Arkansas, they buy up lots in small towns and build pre built warehouses, buildings for future businesses/restaurants etc. So they lease out the property/land to most people, but have sold a few for the right price, but if they are smart they retain the land ownership.

They went on a buying frenzy after the 2008 Great Recession, and now own land and property and buildings in around 4-6 towns within a 4 hour drive from their home city of Mena.

Another relative owns a couple funeral services in a few cities.

Another relative invented a new saw blade design in the 60s that he sold the design/patent to mills all over the world that reduced sawdust by 40%+. This made him a millionaire, then he bought hundreds of acres of timber, and sold the wood in stages, leveled out some of the land and started a chicken ranch, selling chickens and eggs to local grocery stores. Then after about five years, he sold all of the land to Tyson Chicken so they expand and build another factory and made a few more million. Then he just had fun for the rest of his life with his family.


Another relative bought a bunch of land in Colorado over his life as a doctor, then sold it after getting to own almost half of a mountain to a company to build one of the first major ski lodges in the area.

The family on my mother's side are seven generations of lawyers, who mostly all lived in Indiana, except for a group that went to California in the late 70s-80s.


So there's lots of things you can do/invest within as a family. Keep your eyes peeled, always money to be made doing things people don't want to do, and finding ways to make things easier/faster/cheaper/cleaner.

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