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Legacy Investing: What it is and What it Means

February 1, 2023

Legacy investing is the idea that investors should invest in assets that have a greater purpose than just financial gain. It means doing something that can help people, tackle the world’s most pressing issues and leave a lasting impact on the lives of future generations.

While many savvy investors spend years analyzing data, crunching numbers and weighing the pros and cons of every investment, a growing number of entrepreneurs are taking a more holistic approach. Those who invest with purpose often see better returns and more positive outcomes.

Using their resources to improve the lives of others, these leaders are leaving legacies that will live on and influence their communities for decades to come. While some may claim that these people are being too self-focused and shortsighted, there is no doubt that their success is rooted in the fact that they are thinking beyond themselves.

A strong foundation

The first step in creating a legacy plan is to gather all of your financial and other personal information. This should include all your accounts, investments, real estate, insurance policies and works of art. It should also include a list of your heirs and charitable intentions.

Establishing a strong foundation will help ensure that your wealth is distributed in the manner you have intended upon your death. This is particularly important if you have children and want to protect their inheritance.

Assets that don’t serve your goals are typically referred to as “legacy assets.” These include non-liquid securities, private equity and unlisted stocks and bonds. These are usually considered to be lower-risk investments than equities, but they can also be more volatile and subject to market cycles.

It’s important to create a strong foundation for your wealth creation so that it will continue to grow. This will help you to reach your financial goals and keep your assets safe from unnecessary risks in the market.

A good way to do this is to make sure that you regularly rebalance your portfolio. This can be done by putting a percentage of your portfolio in a fixed income fund like a government bond or an indexed mutual fund.

Rebalancing can also help to remove investments that no longer fit your portfolio’s objectives and increase the overall strength of the overall portfolio. It is a simple process, but it can have a huge impact on your returns and your legacy.

Think of it this way: If you have a garden, you need to weed it occasionally in order to maintain the health of the plant. If you don’t weed it, the plant will become overgrown and produce fewer fruits.

That’s what happens to your investments if you don’t rebalance them frequently and remove unwanted holdings that are no longer serving your needs. By doing this, you can avoid losing out on potential opportunities that could provide a higher return than the fixed income or index funds in your portfolio.

Legacy investing offers a unique opportunity to invest with a greater purpose while still reaping superior returns. The key to achieving this goal is making smart investments that deliver the most positive impact on the lives of others while maintaining your financial objectives and generating long-term growth.



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