Cash Flow over Capital Gains
Have you ever heard someone say, “if only I could win the lottery” or, “I could afford that if I won the lottery” ? This type of thinking is most certainly not the way to wealth, but most people can’t understand how to create wealth. It is about valuing cash flow over capital gains. What does this mean? Simply put, to gain wealth, you want to be able to see that you need money coming in consistently rather than one lump sum. The reason why is that you need to have your money work for you to buy the things that you desire. Very rarely, does a person get millions all at once, but you could build a cash flow of $100 a month. Grow it to $1,000 to $10,000 new so on.
Of course it’s easier to get started making a little and keeps it coming in rather than make a boat load of money from the start, but why else should you value cash flow over capital gains? A second reason is for tax benefits. We live in a society where our medium of exchange is a currency. That basically means it needs to flow and this optimal to keep society moving. Because you continue to spend money, you get rewarded for doing so. If you hold on to that lump sum and expect it to last through your retirement, you’re mistaken. It will depreciate 1 to3% each year and you will pay a huge sum in taxes right off the bat. Keep your money moving and invested for increased tax benefits
Take an example of real estate investing. If you flip a property and make $40,000, it sounds like a great payday. But if you don’t reinvest it, you will pay huge amounts in taxes. But, if you buy a rental property for cash flow and earn $1,000 per month you can write many of those expenses off, plus you get paid monthly from here out. You still own the asset and can take more advantage of both appreciation and depreciation.
Another reason to prefer cash flow over capital gains is that your capital gain is only good till the next one. Take for example again the real estate investment. A flip is only as good as the next one. But, with each property you buy and hold, you have a consistent stream of income plus a property that gains value as time goes on.
While, many people dream of being a millionaire or living that lifestyle, they typically don’t know the costs of what they want. . . If they even know what they want. For example, I want to travel. . Travel where? Paris, the Bahamas, Italy? You will find that for only a few thousand, you can enjoy these types of vacations. Or maybe you want high end vehicle, break the cost down and say that costs $1,500 a month. Much more reasonable than looking at the full price and much more attainable. If you want a nice home, same principle; it doesn’t take millions to live the “millionaire lifestyle”
So, this is all great, but how do you get this cash flow? The truth is, we live in a period that it is easier than ever to make money. No, not that the economy is great and high paying jobs are abundant, but we have the internet. You can make money in jobs, or traditional entrepreneurial ways, but the easiest way to start is with the help of the internet. Sell on Amazon, become an affiliate marketer, a YouTuber, trade options, invest in stocks, create apps or e books, the possibilities are endless. First, figure out your goal and determine how to earn that extra cash without having to work even harder to have it. Put your work up from and then let the system do its thing.
For more tips, check into these methods, and see other links on the site about how to get started. Check out the app cash flow to test your thinking about how to escape the rat race.