Closing The Generational Wealth Gap in South Africa

Leaving a legacy and generational wealth

A good man leaves an inheritance to his children’s children.

Imagine you had the power and ability to leave a financial legacy to your children, their children and even their children. Previously, this was only available to the super-rich, but these days you can do the same.   

Generational wealth comes in different shapes, sizes, asset classes and legal structures. For some, it comes in the form of property (real estate), stocks/paper assets, family businesses or even an insurance policy in case something bad happens.

It’s easier than ever to start. In this article, I would like to look at your legacy, how to start and a bit of technical information that might help you on your journey.

What type of legacy do you want to leave?

“No legacy is so rich as honesty.”

– William Shakespeare.

When talking about generational wealth, we generally look at money and investments being passed down. But a legacy is all about ensuring success for future generations. Here are some examples:

  • Many parents work two jobs to pay for university for a child.
  • Some parents sacrifice promotions and business opportunities to spend time with their kids
  • Being kind to the next generation and teaching them the lessons you’ve learnt 

In my opinion, few things are as valuable as giving a part of yourself to your child. Too often our career takes priority, we get overwhelmed with life or run away from responsibility – at the cost of our legacy. We need to start:

  • Saying no to overtime
  • Have dedicated time with our spouse and children
  • Teach our children about money rather than buying our way into their lives  

Though good mental health and being there for your children is vital for progress, I encourage you to start thinking about generational wealth as well. This journey is a long term one and will pay off in the long run. 

How do you start building generational wealth?

Quite often, we’re afraid of starting. It’s like a writer staring at a blank page – where do you start? For me, this is split in three distinct categories: yesterday’s mistakes, today’s risk and tomorrow’s glory.

Deal with yesterday’s mistakes: Debt

People spend tomorrow’s money for today’s luxuries.

Taking charge of your money can be challenging – especially if you have issues from the past that’s following you. 

Nothing should keep you from living a life beyond the past.

When looking at becoming better for tomorrow, we need to deal with our past – the things killing our destiny. Debt seems to be the biggest killer, and we need to take the impact seriously. There are generally two methods to paying off debt:

  • Avalanche method – paying off the highest interest rate first
  • Snowball method – paying off the smallest amount first

Manage today’s risk: Insurance

I love the idea that our love for our children compels us to plan for risks. For example, if my business would find itself with a shortage of clients, I need to make sure I have an emergency fund for the short term.

I also need ot make sure that in case I get hit by a taxi (which is not unheard of), that my child will be able to go to school, university and be empowered for living a successful life. I recommend checking the following:

Plan tomorrow’s glory: Investing

Never invest in something you don’t understand

People quite often invest in things they don’t know. We see this when people invest in RAs, money market funds (e.g. ABSA money market fund) and even property and cryptocurrencies.

Make sure you do your research and know how the asset will behave. For example, stocks fluctuate on a daily basis, crypto on a per-minute basis and property over years. Here are some options for things to invest in for the long run and where you can find more info on them:

  • Property/Real Estate – Articles here on LocalMoney
  • Cash (and equivalents) – Article here on LocalMoney
  • Life insurance policies – Articles here on the Take Charge Of Your Money Blog
  • Investments – Getting started article here on LocalMoney
  • Family businesses 
  • Antiques and heirlooms
  • Collectable items (jewellery, coins and other items)

Start investing

Though I believe you need to do your research before you invest, it’s better to start than getting analysis paralysis or waiting for the perfect conditions. 

I highly recommend using apps such as EasyEquities, Franc App and even Luno if you’re wanting to start. Even if you start with R 50. My top tips for starting are:

  • Set up a debit order that will deduct the money 3 days after payday. Out of sight, out of mind!
  • When starting out, invest in well-diversified, low fee money machines such as ETFs, (well-chosen) properties or similar.
  • Avoid arbitrary, unregulated industries where you need to hand over your money and have nothing to show for it. 

Planning your legacy

There are certain things that you can do to leave a legacy for your children. Some seem obvious, but many people don’t have small things in place that will make a big difference:

  • Will and testament – have a legal, signed will and testament 
  • If you have a pension fund or RA, make sure that you name the beneficiaries.
  • Have a file of life so that people will find all your policies  

Trusts and generational wealth

As your assets and possessions grow, so will the taxes and liability. For this reason, many people opt to create a trust. Over time, they move all their assets into the trust: property, farms and household content. As this is seen as a separate legal entity, it cannot die. 

Trusts are thus not required to pay estate duties. They do need to pay tax on profits though. If your assets are above R 3 million, I recommend speaking to a legal professional who will be able to guide you to the best legal structure for generational wealth.


Generational wealth is not for the rich only. We need to grow what we have by dealing with the debts of yesterday, managing the risk of today and investing for tomorrow’s glory. Whether you want to invest in stocks, property, cash or crypto – make sure that you will be able to transfer the wealth to your children.

If you don’t have children, why not invest in the next generation through sponsorships or share your knowledge through mentoring?

Leave a legacy.

Happy investing!

Sources consulted


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