Will You Pass on Generational Wealth or Generational Burden?
True or False: Can the financial decisions you make today impact several generations to tomorrow?
Richy Rich Junior was the same age as his friend Poor Paul Junior, and were both excited and proud that they each amassed J$2.5 million to purchase their first home. Then calamity struck; they both lost their dads. The difference was that Richy Rich Senior had a property, cash as well as health and life insurance, but Poor Paul Senior did not. What they both left behind would impact their families for generations.
POOR PAUL’S GENERATION
POOR PAUL JR: Inherits J$3M in medical and funeral expenses.
When his dad died, so did his dream of home ownership. The J$2.5M that he planned to use as a deposit for his own home was consumed by his father’s medical and funeral bills. Still needing more money, he took a same-day loan for J$500k.
He felt overwhelmed so his financial advisor encouraged him, “Every mickle mek a muckle. Let’s create a new financial plan.” He however never did.
When his wife became pregnant with their son, Poor Paul III, they moved into a larger rental property which increased their monthly expenses. Now, with the repayment of the loan, monthly rental payments and other increased expenses, he had even less income to invest towards a home, child’s education, retirement and/or purchase life insurance.
POOR PAUL III: Inherits Millions in Debt and Financially Burden
When Poor Paul III grew up, he had limited disposable income saved/invested towards his goals, like a home of his own. Why?
• He began his working life with millions of dollars in student’s loan debt, because his father was not able to make any financial provision for his education.
• He had the financial burden of supporting his father who did not adequately prepare for his own retirement.
• Upon the death of his father, Poor Paul Junior, rather than inheriting assets, inherited millions of dollar in medical and funeral expenses just as his father had inherited from his father.
RICH RICHY’S GENERATION
RICHY RICH JR: Inherits Cash from the life insurance + investments + a property = J$50 million
• Although he was emotionally devastated by this dad’s death, his financial future was brighter than before, as his dad left him a property and investment and he was one of the beneficiary on his father’s insurance policies. He added some of his cash inheritance to the J$2.5M he had saved towards his house and therefore made a larger deposit on his home. This allowed him to borrow a smaller mortgage amount from JMMB Bank, and this resulted in lower monthly repayments.
• Richy Rich Jr. rented the inherited property and therefore enjoyed increased income, which allowed him to afford a second investment property. He purchased health, life and property insurance through JMMB Insurance Brokers. Additionally, he invested the rest of his inheritance in a range of financial assets with JMMB and started planning for Richy Rich III’s college education using the JMMB Graduate.
RICHY RICH III: Inherited assets and Financially Freedom
• Richy Rich III started his adult life debt free as he had no student loan debt, because his father had invested in a JMMB Graduate to secure his educational expenses.
• Additionally, his father, Richy Rich Junior, used some earnings, from his JMMB investment portfolio, to gift him the down payment on his first income property.
• Upon the death of Richy Rich Jnr., his son, Richy Rich III inherited three (3) income generating properties, plus millions in investments and a significant sum from his life insurance policy, just as his father had inherited from his father.
SO WHAT WILL YOU DO?
What do you want your generation’s tale to be, Rich Richy or Poor Paul? Your future generations are depending on you. So please give us a call at (876)998-5662, and we can help you to make the right financial moves for tomorrow, no matter where you are today.