Now I want to be very clear that there are many different ways that someone can be wealthy.

There is external wealth (finances, lifestyle, and toys), and then there is internal wealth (happiness, fulfillment, emotional mastery, and personal development).

Right now I want to talk about external generational wealth.

I’m building generational wealth myself, and have clients who both have massive generational wealth, and are building generational wealth so this is something near and dear to my heart.

Financial independence comes when you generate enough wealth to live comfortably without having to work again. Personally I like a beginning ratio of 10:1…so for every dollar going out, I have $10 that comes in whether I work or not.

A lot of people think about being financially independent. 52% of people say having the financial freedom to do volunteer work or donate to charity is a very important priority. And more than 65% of Americans say they wish they had more time to do what they love.

We all have different goals, but I think you will agree that most people want to gain material wealth. But few who do think deeply about how they will make it happen.

Before we get to far, let me preface this by saying there is a difference between being rich and being wealthy. Many people have a lot of money and are rich. But wealth is measured in generations.

So, do you know the one sign that you will be financially wealthy?

The one sign that you will be wealthy is that you “stay true.”

“Stay true” means possessing assets that first and foremost are delivering positive cash flow every month whether you work or not. The second level of assets to own or control are assets that will significantly increase in value over time.

Here are a few examples:

Business

This is perhaps the hardest, but most rewarding path. If you look at the most powerful and wealthiest men and women in the world and history there is a good guess that you will be looking at entrepreneurs and founders. Starting your own company is not for the faint of heart.

If successful, your business will not only build a solid foundation of wealth, but could someday generate a substantial amount of money as it grows or is acquired.

Now if you don’t want to start your own business, there are other ways to play the game. You could find a way to own stock or equity in companies. This can be through consulting for equity, buying the equity, and even getting into a company pre IPO.

Owning a small part of a company is better than owning nothing at all.

Real Estate

Owning real estate has historically been one of the major asset classes of the wealthiest people in the world.

In my research real estate is where a lot of wealthy people hold their wealth. Real estate comes with many advantages both income wise and tax wise.

As a property owner you have the freedom in how you operate. You can rent, renovate, or sell your property on your own terms. You can generate income and yield over the short term, increase value long term, and gain tax advantages by deducting the cost of ownership.

Stocks/Paper

The last asset class to own is stocks or paper. This includes bonds, mutual funds, savings, etc.

This is probably my least favorite when it comes to not being able to use leverage and have control, but it’s also one of my favorite when it comes to how liquid and fast I can move.

Stocks can give you ultimate flexibility when it comes to how fast you can move, and you have the option to invest for income (dividends) and also invest for capital gains (buy low, sell high; or sell high, buy low…short selling).

Now when it comes to investing in the market you need to know the difference between fundamental analysis and technical analysis.

Skills

I wasn’t going to add this part, but in my research I felt I’d be remiss if I didn’t include how the skills you develop can be an asset and help in building your wealth.

I think of someone like hedge fund mangers who get paid hundreds of millions (even billions) of dollars. They are delivering massive value for their clients and this is why they get paid that amount of money. Look at that and then compare it to someone who works maybe in the mail room. They are also delivering a value, but that value is limited.

The same thing goes with NBA players, CEOs, celebrities, and world changers. They have a unique skill that people pay lots of money for.

The skills they develop increases their value and keeps countless others in business as well. Think about the best neurosurgeons in the world and the people they need on their team to help them stay the best and support them in their job.

If you possess a difficult to obtain skill, think of it as your key currency.

Outside of having wealth given to you by either inheritance or marriage (and in those situation the chance of losing it is very high) these are the best ways to build generational wealth.

I can say that comfortably because I have been studying, researching, working with, and coaching some of the most powerful, wealthiest men and women in the world.

What other areas of wealth do you think are missing? 

Comment below and let me know what you think.