Personal Finance

I want to set my great-grandkids up for success in 70 years - what steps should I take today?

Marc Guberti

Published: February 22, 2025 3:37 pm

Some people continue to save money until they have achieved their retirement goals. However, others get more ambitious and aim to save enough money for multiple generations. A recent post in the Fat FIRE group demonstrates how much planning some people do to financially provide for multiple generations.

The Redditor mentions that a 70-year time horizon can result in a 500x-1,000x gain, effectively turning a $100k portfolio into a $100m portfolio. It assumes an annualized 10.85% return during that stretch.

The parents intend to fully fund 529 accounts for their children and grandchildren. The couple is also exploring Roth IRAs, S&P 500 index funds, leveraged ETFs, real estate, and establishing relationships with multiple banks to protect themselves from worst-case scenarios (i.e., one of the banks goes bankrupt). 

I’ll share some thoughts on this post, but it is good to speak with a financial advisor if you can.

Growing Your Income Is the Top Priority

The Reddit post seems to be all over the place, with different places to invest the money. Building generational wealth isn’t about having a bunch of different assets. For some people, it simply means buying the right stock at the right time.However, there are two steps the Redditor suggested that I will highlight.

The first concern is setting up 529 savings accounts for the children and grandchildren. I lean more toward alternative education routes that save plenty of money while offering enticing career opportunities. Trade schools, online certificates, and initial work experience don’t require college degrees and can move you ahead faster. If you want your children to go to college, then by all means, save for them in a 529 savings account. However, the landscape can look vastly different by the time you have grandchildren.

The other concern is leveraged ETFs. The Redditor mentions a leveraged ETF that has outperformed the stock market over the past five years, but that’s only if you ignore the high fees. Leveraged ETFs are not meant to be long-term investments. It’s better to put the money into traditional ETFs or look for captivating growth stocks to maximize long-term returns.

Don’t Assume a 500x-1,000x Growth Rate Over the Next 70 Years

Past results don’t guarantee future success. However, with the stock market having a trend of going up historically, it’s easy to believe the S&P 500 will continue to march higher. A 500x-1,000x growth rate over the next 70 years may sound ridiculous, but it is a part of historical trends. The Redditor uses the S&P 500’s returns from 1953 to 2023 to make this projection. 

While it’s true that the S&P 500 delivered those types of returns, population growth is a notable caveat. The population boom started with the boomers, and that presented a multi-decade easy money opportunity in the stock market. While recessions and economic setbacks were a part of the stock market, soaring population growth meant more customers, productivity, and sales. Corporations got away with lower wage growth rates since the workplace was growing so rapidly, and a growing consumer base translated into higher revenue numbers.

Those trends that carried the S&P 500 for more than 50 years are going to reverse within the next 20-30 years. The United States’ fertility rate was at 1.79 in 2024, which is below the 2.1 replacement level. The U.S. hasn’t been above the replacement level since 2007, meaning that depopulation is guaranteed, barring a population boom that rivals what we saw at the end of World War II. 

It’s even worse for China, which reported its third consecutive year of population decline amid a low fertility rate. Asian countries have some of the lowest fertility rates. South Korea has a dangerously low 0.68 fertility rate.

Investors shouldn’t bank on the S&P 500 repeating its 70-year gains with populations set to decline quickly worldwide. Fewer people means fewer customers and lower financial growth rates. Lower populations can also spark long-term deflation. It goes to show how risky it is to believe that the returns we saw over the past 70 years will continue into the next 70 years.

Continue to Save and Invest

Building long-term wealth requires focusing on the essentials. If you save and invest your money, you will get far and give your children a good nest egg. It’s also important to teach them how to make and save money so they can eventually earn more than you. If you teach your children about money, they’ll have a better chance of becoming financially independent on their own. Then, the money you save serves as additional resources for financially capable adults.