Gen X Is Falling Behind: 8 Ways They Can Build Generational Wealth Now
Use Health Savings Accounts
If your goal is to preserve wealth, you should think of health savings accounts (HSAs) as investment vehicles, according to Paul Ferrara, senior wealth counselor at Avenue Investment Management. That’s because the funds can grow tax-free.
In addition, if you use the money to pay for medical expenses, you can withdraw it tax-free. That protects your other assets from having to be used for medical expenses, preserving your generational wealth.
Avoid Cheaper Health Coverage
When it comes to health, saving a few bucks today can often cost you much more in the long-run. For that reason, Ferrara strongly advised avoiding cheap health insurance.
“The lower premiums may be tempting, but one health issue will decrease years of savings,” he said.
Pay Off Debt
In addition to the above and other strategies, one of the most powerful things you can do is pay off your debt, according to Ferrara. “Reducing high-interest credit card debt or personal loans has a guaranteed rate of return that is as good as many investments,” he said.
Consider the fact that getting rid of a $20,000 credit card balance that has a 15% interest rate (and many have even higher) saves $3,000 a year in interest. That money can be put toward earning interest instead.
Buy Property
Real estate has long been one of the staples of generational wealth transfer. So if you are in a position to buy property, it’s most likely a good investment. Consider that 50 years ago, in 1975, the median home price was $38,100. Today, it’s $410,800.
Buying a rental property is an especially smart move, according to Melanie Musson, insurance and finance expert at Clearsurance.com. “With real estate, you can earn rental income while retaining an appreciating asset, the property,” she said. And, she added, if you can’t afford to buy a rental property, you could consider real estate investment trusts.
Rent Out Part of Your Home
If you’re like many Gen Xers, you are a recent empty nester. That might mean you’re thinking of downsizing. But there’s another, possibly more lucrative, way to go, according to Ryan Barone, co-founder and CEO of RentRedi.
“Consider renting out extra spaces in your home to generate extra income that you can then save or reinvest in retirement accounts or another rental property,” he said. If you inherit a property, you might also want to consider renting it instead of selling it.
Barone suggested consulting a tax specialist or wealth advisor before making any major real estate decisions. The next generation will thank you.
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This article originally appeared on GOBankingRates.com: Gen X Is Falling Behind: 8 Ways They Can Build Generational Wealth Now
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