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What is Generational Wealth? How You Can Build it Through Investing
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Experts Share Tips on Overcoming the Disparity in Generational Wealth
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8 years of experience Expertise Retirement credit wellnessElizabeth Ayoola is a Lead Multimedia Producer and Co-Host of the "Smart Money" podcast. Before delving into the podcast world, Elizabeth acquired over ten years of experience as a writer, and seven were spent covering personal finance topics. Her journey to finance writing started with a goal to learn as much as she could about how to attain financial freedom and share information with others about how to do it, too. This led her to Debt.com, where she covered topics relating to mortgages, debt and credit. Her articles have appeared on platforms like Washington Post, The Associated Press, The Washington Post, Yahoo, Essence, The Knot, PopSugar and Parents.com. Elizabeth has also done extensive spokesperson work and appeared on multiple renowned national networks like Good Morning America, ABC, NBC, and Fox to discuss money.
Elizabeth Ayoola is a Lead Multimedia Producer and Co-Host of the "Smart Money" podcast. Before delving into the podcast world, Elizabeth acquired over ten years of experience as a writer, and seven were spent covering personal finance topics. Her journey to finance writing started with a goal to learn as much as she could about how to attain financial freedom and share information with others about how to do it, too. This led her to Debt.com, where she covered topics relating to mortgages, debt and credit. Her articles have appeared on platforms like Washington Post, The Associated Press, The Washington Post, Yahoo, Essence, The Knot, PopSugar and Parents.com. Elizabeth has also done extensive spokesperson work and appeared on multiple renowned national networks like Good Morning America, ABC, NBC, and Fox to discuss money. Published in Writer + more + more
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24 years of experience Expertise Personal Finance Budgeting Taxes Retirement Underrepresented communitiesPamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage.
Pamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage.Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more.
Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more.Previously, she led taxes and retirement coverage at NerdWallet.
Previously, she led taxes and retirement coverage at NerdWallet.Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years.
Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years.Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.
Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group.
She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group. Managing Editor + more + moreYou've probably heard about the wealth gap and generational wealth, but here's a number for you: There's a $200 billion annual gap between Black and white recipients of inheritances, according to a 2021 McKinsey Global Institute report, The Economic State of Black America
You've probably heard about the wealth gap and generational wealth, but here's a number for you: There's a $200 billion annual gap between Black and white recipients of inheritances, according to a 2021 McKinsey Global Institute report, The Economic State of Black America McKinsey & Company. The economic state of Black America: What is and what could be. Accessed Sep 22, 2022. . According to the report, Black families are also less likely to receive an inheritance.But Black financial advisors say there are ways to change the situation. They offer suggestions on how to start investing now to build wealth for future generations.
But Black financial advisors say there are ways to change the situation. They offer suggestions on how to start investing now to build wealth for future generations.What is generational wealth?
What is generational wealth?When assets are passed down across multiple generations, that's often referred to as generational wealth. What type of assets? Think property, a Roth IRA account, a 401(k), life insurance, stocks and bonds, or anything else that has monetary value.
When assets are passed down across multiple generations, that's often referred to as generational wealth. What type of assets? Think property, a Roth IRA account , a 401(k), life insurance, stocks and bonds, or anything else that has monetary value.How to start building generational wealth through investing
How to start building generational wealth through investingInvesting is one way to build wealth, but not everyone has the resources or confidence to do so.
Investing is one way to build wealth, but not everyone has the resources or confidence to do so.A 2021 Wells Fargo/Gallup Investor and Retirement Optimism Index survey
A 2021 Wells Fargo/Gallup Investor and Retirement Optimism Index survey Gallup. Black Investors' Financial Goals and Resources in 2021. Accessed Sep 22, 2022. found that Black investors' risk tolerance is below average. Of the Black investors who responded to the survey, 54% said they are most comfortable taking on "only a little risk" compared with 47% of all investors.Systemic racism and long-standing economic disparities are also barriers to entering the financial system, says Ayesha Selden, a Philadelphia-based certified financial planner, economic activist and entrepreneur.
Systemic racism and long-standing economic disparities are also barriers to entering the financial system, says Ayesha Selden, a Philadelphia-based certified financial planner, economic activist and entrepreneur."Most of us didn't grow up in homes where wealth was talked about. Investments, mutual funds, stocks weren't talked about. How do you pick a stock?" Selden says.
"Most of us didn't grow up in homes where wealth was talked about. Investments, mutual funds, stocks weren't talked about. How do you pick a stock?" Selden says.If fear is something that's holding you back, exploring your money mindset and implementing some of the strategies below may be helpful.
If fear is something that's holding you back, exploring your money mindset and implementing some of the strategies below may be helpful.Understand the resources available to you
Understand the resources available to youChelsea Ransom-Cooper, a New York City-based CFP and managing partner of Zenith Wealth Partners, suggests you start your journey by learning what tools are available and then choosing which work best for you.
Chelsea Ransom-Cooper, a New York City-based CFP and managing partner of Zenith Wealth Partners, suggests you start your journey by learning what tools are available and then choosing which work best for you.For example, if you have a workplace retirement plan, you might have access to a 401(k), and if you're an entrepreneur, it might be a SIMPLE IRA.
For example, if you have a workplace retirement plan, you might have access to a 401(k), and if you're an entrepreneur, it might be a SIMPLE IRA .Ransom-Cooper says that understanding these retirement plans isn't always the easiest feat.
Ransom-Cooper says that understanding these retirement plans isn't always the easiest feat."There's a learning curve for these things. I think traditionally — unfortunately — Black people have always been kind of last to learn about these things, where we see white families have been using these for decades,” she says.
"There's a learning curve for these things. I think traditionally — unfortunately — Black people have always been kind of last to learn about these things, where we see white families have been using these for decades,” she says."Now, I think millennials and Gen Z are really educating themselves on what these resources and these tools are, and how they can be impactful for their own financial journey."
"Now, I think millennials and Gen Z are really educating themselves on what these resources and these tools are, and how they can be impactful for their own financial journey."Use your employer benefits
Use your employer benefitsMalik S. Lee, CFP and founder of Felton & Peel Wealth Management in Atlanta, says company retirement plans are "low-hanging fruit." According to Lee, 401(k)s are a simple way to get started, no matter what your financial situation is.
Malik S. Lee, CFP and founder of Felton & Peel Wealth Management in Atlanta, says company retirement plans are "low-hanging fruit." According to Lee, 401(k)s are a simple way to get started, no matter what your financial situation is."If you are a beginner to building wealth or you are living paycheck to paycheck, saving via your 401(k) is the most efficient way to save because your money is going in pre-tax," he says.
"If you are a beginner to building wealth or you are living paycheck to paycheck, saving via your 401(k) is the most efficient way to save because your money is going in pre-tax," he says.And, he says, don't forget to get the company match.
And, he says, don't forget to get the company match."If your job is going to match you dollar for dollar up to, let's say 5%, that's a 100% guaranteed rate of return."
"If your job is going to match you dollar for dollar up to, let's say 5%, that's a 100% guaranteed rate of return."Brokerage firms
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
Come up with an investing strategy
Come up with an investing strategyOnce you know what vehicles you want to use, it's time to develop an investing strategy. To do this, Ransom-Cooper says people should figure out what their goals are and whether they want to take an active or passive approach toward investing.
Once you know what vehicles you want to use, it's time to develop an investing strategy . To do this, Ransom-Cooper says people should figure out what their goals are and whether they want to take an active or passive approach toward investing.Determine whether you want to learn how to invest in stocks and research different companies, or if you would instead prefer to use a robo-advisor and let an algorithm do the research and investing for you, Ransom-Cooper says.
Determine whether you want to learn how to invest in stocks and research different companies, or if you would instead prefer to use a robo-advisor and let an algorithm do the research and investing for you, Ransom-Cooper says.Another critical piece is knowing what drives you to build generational wealth, she says.
Another critical piece is knowing what drives you to build generational wealth, she says."I can give clients a financial plan, but if it doesn't actually motivate them and it's not aligned with their core values and their interests, it's not actually going to work," she says.
"I can give clients a financial plan, but if it doesn't actually motivate them and it's not aligned with their core values and their interests, it's not actually going to work," she says.Be consistent
Be consistentHaving a strategy will get you on the road to generational wealth, but you need consistency to keep you there, Lee says.
Having a strategy will get you on the road to generational wealth, but you need consistency to keep you there, Lee says.He suggests deciding how often you're going to contribute to your investing goals and automating contributions to your investments or retirement accounts.
He suggests deciding how often you're going to contribute to your investing goals and automating contributions to your investments or retirement accounts.Being consistent might be challenging if you have other financial responsibilities, such as taking care of your family.
Being consistent might be challenging if you have other financial responsibilities, such as taking care of your family.Of the investors surveyed by Gallup, 69% of Black investors provided "significant or routine financial help" to at least one friend or family member in the past few years, compared with 57% of U.S. investors as a whole.
Of the investors surveyed by Gallup, 69% of Black investors provided "significant or routine financial help" to at least one friend or family member in the past few years, compared with 57% of U.S. investors as a whole.Selden says people sometimes feel financially responsible for loved ones, especially if they're the first person in the family to earn a decent income, but that leaves them with less to put toward their investment goals.
Selden says people sometimes feel financially responsible for loved ones, especially if they're the first person in the family to earn a decent income, but that leaves them with less to put toward their investment goals."Our priorities should be three things, and those three things should be self, family, community — in that order," she says.
"Our priorities should be three things, and those three things should be self, family, community — in that order," she says.Have an estate plan in place
Have an estate plan in placeAll of the hard work put into investing can be threatened without an estate plan.
All of the hard work put into investing can be threatened without an estate plan ."I'm talking about making sure your beneficiaries are right, making sure things are titled correctly, [and] making sure documentation is in place," Lee says.
"I'm talking about making sure your beneficiaries are right, making sure things are titled correctly, [and] making sure documentation is in place," Lee says.Taking these steps will ensure the assets you leave behind are easily accessible, and heirs aren't racking up legal fees trying to gain access, Lee says.
Taking these steps will ensure the assets you leave behind are easily accessible, and heirs aren't racking up legal fees trying to gain access, Lee says.After you've dedicated time and resources to building wealth, you can share the knowledge with your loved ones.
After you've dedicated time and resources to building wealth, you can share the knowledge with your loved ones.Ransom-Cooper says young Black investors are doing just that.
Ransom-Cooper says young Black investors are doing just that."We talk about lifting as you climb, but they're also lifting up to their parents and to their older family members trying to educate them on the tools that are available."
"We talk about lifting as you climb, but they're also lifting up to their parents and to their older family members trying to educate them on the tools that are available."Helpful resources
Helpful resources How to Start Investing in Stocks Individual Retirement Account (IRA): What It Is & How It Works The Best Index Funds and How to Start Investing More like this Investment Basics Investing Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana