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How To Build Generational Wealth Without a Big Salary, According To Jaspreet Singh

Updated: 01-11-2024, 03.21 PM

Many people believe that buying a home is the best way to build generational wealth, especially if you have a limited income — but money expert Jaspreet Singh says that this isn’t the case.

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“When most people think of generational wealth, they’re thinking, ‘I own this home that’s worth $600,000 with a $500,000 mortgage. I’m going to work to pay down my mortgage to 0, that way then I can pass down this house to my kids,’” Singh said in a recent YouTube video. “But that’s not what real generational wealth looks like.”

Singh believes that real generational wealth provides income while you are living and then provides that income to future generations. Not only does a home not generate income, but it actually continues to cost money for whoever inherits it — even if you’ve paid off the mortgage.

“There’s no mortgage payment, which is great, but you still have to pay property taxes, you still have to pay your property insurance, and you still have to pay for the upkeep,” Singh said.

Even if your heirs sell the home, it isn’t generating income.

“You could just sell the home and you can pocket this $1 million [and] put it into your bank account, but now the problem is this $1 million isn’t paying you anything,” Singh said. “It’s just sitting there. And now if you live off of $100,000 a year, well, this money is going to be completely gone in 10 years.”

Instead of buying a home, Singh said there are three other assets you should focus on buying to create true generational wealth.

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There are a few types of stock investments Singh recommends for building generational wealth, the first of which is domestic dividend-paying funds. These are typically low-risk investments that pay dividends just for being an investor.

For those willing to take on more risk, Singh said to consider investing in a real estate investment trust (REIT). If you want to get “even more sophisticated,” Singh said to look into international ETFs.

“There’s higher risk, but also higher growth potential,” Singh said.

The way to turn these investments into generational wealth is to invest consistently over time and to keep reinvesting your profits, Singh explained.

“The reason why so many people fail with this type of dividend investing is because they look at something that’s paying out a 3 or 4% dividend yield and they say, ‘Well, I’d have to invest millions of dollars to make a solid stream of income, so it doesn’t really make sense for me to go out and invest in these dividends because I’m never going to actually have that type of money.’

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