Create a legacy for the next generation
You don't need a whole lot of money to get started.

It's important for seniors to create legacies. But how many are interested in creating a legacy for the next generation?

Many seniors have worked hard, have had rewarding careers and built up both tangible and intangible assets. But what's the next step in their life's journey? I am pleased to have elderly clients who are enjoying their retirement and building a legacy for the next generation. Some clients don't have significant physical assets, such as houses and lands to pass on to their children or grandchildren, but they have the wisdom to understand that they can still amass wealth in retirement or build a legacy for future generations.

More seniors are investing in stocks as a way of creating a legacy for their children and grandchildren. Instead of leaving cash in the bank or relying only on death benefits from insurance proceeds, these clients are providing living benefits for their loved ones through various investment instruments, primarily stocks. Their children and grandchildren are added to their investments and, in some instances, the seniors initiate the investment discussion with their children and volunteer the initial principal as gifts for their adult children. Just recently a retiree visited my office because he was interested in initiating long-term investments for his three adult children. He wanted separate long-term investments for each child, which he said is to give his children a better future. Because his children are young adults, this senior believes that investing in stocks will create substantial returns in the future. He understands that stocks are high-risk investments, but with time the rewards will compensate for the risks and provide above-average returns for his children.

Some seniors, however, spent their life being risk averse, only to find out that avoiding risks only leads to retarded growth in their investments. Their monies have reduced purchasing power due to inflation and the longer they live the less their monies are able to purchase.

Recently, a medical doctor said he benefited significantly from investing in stocks but regretted not investing in stocks in his 20s. He noted that young investors have more time to recover from stock market turmoil and a longer time for investments to compound and recover from losses and create wealth.

My recommendation to seniors who want to create a legacy is to invest in a managed or mutual fund. You don't need a whole lot of money to get started. One company that has done very well in managing pooled funds in Jamaica is BPM Financial Limited. The managed fund concept involves pooling investors' funds and investing the monies in many different companies from different industries. These are long-term investments, and the returns are not overnight magic but long-term sustainable growth that allows investors to achieve financial freedom and create wealth. These long-term instruments grow exponentially after the first 10 years and the investments also become less risky.

Building your legacy through pooled funds is less risky than investing in a single stock or a few stocks. Pooled funds or mutual funds allow for the diversification of investments which will maximise returns on investments. The National Study of Millionaires conducted by Ramsey Solutions in the USA reported that not one millionaire achieved millionaire status by investing in just one stock. The research also revealed that 79 per cent "did not receive an inheritance". The majority contributed to pension plans in their workplace during their working life and, in addition to having a formal pension plan, invested consistently on a long-term basis.

It's not difficult to start building a legacy. What are the financial lessons that you want to pass on to the next generation and what is the legacy that you want to create? Which charity or organisation needs your support? Understanding your life's purpose is the first step in building your legacy. A habit of investing will encourage the next generation to build on the foundation established.

According to English writer Charles Dickens, "No one is useless in this world who lightens the burdens of others". The question is: "Whose burden will you lighten?

Grace G McLean is financial advisor at BPM Financial Limited. Contact her gmclean@bpmfinancial or visit the website: She is also a podcaster for Living Above Self. E-mail her at

A habit of investing will encourage the next generation to build on the foundation established.

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