When we love someone or something, we go out of our way to protect it. But sometimes, it’s hard to know how best to provide protection when it comes to the uncertainty of the future. What might happen 10, 20, or 30 years from now? What can we do today to help ensure that our loved ones are protected long after we’re gone?
This is the reason so many of us work hard: to set aside money and build financial legacies we can leave to future generations. But with factors like inflation and market volatility, it may take more than just setting money aside to build a financial legacy that lasts.
Every year, our cash loses some of its purchasing power.
Inflation is a constant in our economy—that’s just a fact. Part of our economy growing includes an increase in the cost of consumer goods, which means that every year, our hard-earned dollars don’t go quite as far. But sometimes, inflation runs extra hot, like it did in 2022 when household energy costs rose 19% and food costs rose 12%. In times like those, any cash you’ve set aside suddenly doesn’t look like it’ll be worth much by the time it reaches your grandchildren or great-grandchildren.
So instead of hiding that cash away in the mattress or burying it in the backyard, you may want to convert it into other types of assets—ones that tend to see growth over the long term.
One type of asset may not be enough for a long-term financial legacy.
I’m not one to take chances. I like to do my research and plan ahead before making big decisions. The same goes for my financial legacy. I’m far too risk-averse to place all of my eggs in one basket and, say, put my entire life’s savings into the stock market. That’s why, to help build a financial legacy that lasts, I choose to diversify my portfolio to help weather whatever uncertainty may come between now and when my children or perhaps my grandchildren or great-grandchildren receive my financial legacy.
Look at what’s happening in our economy right now. On January 30, 2023, Piper Sandler Chief Global Economist Nancy Lazar told Fox Business that a recession in 2023 would look more like the recession in 1973–1974 than the recession in 2020—the former being a period of stagflation Fox Business called “the biggest crisis of the 1970s.” If such an economic event were to take place right before you pass on your financial legacy and your portfolio were largely made up of stocks or other assets that may respond negatively to a recession, your loved ones might receive far less protection from your financial legacy than you intend.
That’s not to say that stocks have no place in a financial legacy. Like with precious metals or real estate, stocks can often provide long-term growth as part of a well-diversified portfolio. That’s the key phrase: “well-diversified portfolio.” By allocating your wealth to a variety of assets that respond differently to economic factors, you may be helping protect both your legacy and your loved ones in the future.
Precious metals can become the cornerstone of a long-lasting financial legacy.
As cash loses its value and paper-based assets like stocks experience high levels of volatility in the short term, precious metals like gold can become key assets when creating a financial legacy that’s meant to last for generations. Gold has been used as a store of wealth for thousands of years and has a long history of being seen as a hedge against the sort of market volatility that can send stocks tumbling, as well as a hedge against inflation. Between April 2001 and March 2022, gold prices rose by nearly 650%.
Gold also allows you to hand down to future generations something they can physically hold in their hands—a hard, tangible asset that provides additional peace of mind in times of economic uncertainty. After all, the company you buy stock in may no longer exist in 50, 60, or 100 years—but physical gold will. And that’s what creating a financial legacy is all about—providing peace of mind, both for ourselves so we know that our loved ones will be protected and also for those who will eventually inherit that protection.
Building a financial legacy takes a lot of hard work. Diversifying with precious metals like gold, along with other long-term assets, may help ensure that your hard work lasts for generations.