What is Generational Wealth?

Is generational wealth, a fortune that lasts across several generations, a myth? Stefan Neuss, founder of WERA Capital Partners, says it is not. He has studied more than 500 biographies of wealthy families from Germany, Switzerland, Austria and across Europe, and he says they all follow the same pattern. He calls it the "circle of wealth".

Every one of these family fortunes began with a single decision. At some point in the family's history, one person decided to start a business and make it profitable. According to Neuss, this is the foundation of all generational wealth.

The second common feature is a well-planned international structure. Wealthy families often hold hundreds of companies, trusts and foundations in different countries. These structures allow profits to be taxed once, legally, while keeping as much as possible of the after-tax profit inside the family's control.

At the end of each financial year, after taxes have been paid, the profits are taken out as dividends, placed into the structure and used to buy assets. These assets earn income of their own. That income is taxed and reinvested again, year after year. This repeating cycle is the circle of wealth.

Neuss admits that the world feels unstable and uncertain. But he also sees great opportunity: today a single business, even a single app, can create a fortune within a few years. "These are three steps everybody can learn," he says.

WERA Capital Partners has written down the patterns it found in wealthy families and makes this knowledge available to business owners. More information is available through the company's website.