How many times have we heard about somebody who hit it big, only to spend it all and eventually run out of money?
It happens all the time to people who win the lottery. I know a few investors who have had this experience also. And there are more than a few entrepreneurs who have risen to fame and fortune on the back of their start-up… only to ride the escalator back down the other side.
When we look at those experiences, it’s like a see-saw pattern. We can clearly see the rise and fall.
I know those experiences are limited – most of us haven’t hit it big only to go broke again. But then when I look at the conventional retirement planning model, I see the exact same pattern – just over a longer timeline. Here’s what I mean…
With qualified retirement plans like 401ks and IRAs, you work hard for years to build up assets in your account. According to Retirement Incorporated, the name of the game is to get your accounts up to a big enough number so that you have enough money to retire.
Then what happens when you retire?
According to this model, you are supposed to sell off a portion of your assets each year, pay taxes on the sale, and then use the proceeds to live on. And if you do that, your assets diminish every year that goes by.
That’s the see-saw. If you follow the conventional model, your assets go up while you’re working… then they go down when you retire.
No wonder so many people feel anxious as they approach retirement – they sense deep down that something about this model is fundamentally flawed.
So let’s shift the paradigm.
What if you didn’t have to choose between assets and income? What if you could generate monthly income without needing to sell off your assets?
That’s the foundational difference between Retirement Inc’s model and investing for true financial freedom. The former puts you on a see-saw. The latter puts assets and income on the same team.
The Power of Cash Flow Investing
Cash flow investing is about strategically acquiring assets that pay you a stream of monthly income. The key here is that the assets you own provide you with income… so when you want more income, you buy more assets. Then both your asset balance and your income goes up.
This is how we get off the see-saw. And the beauty of this approach is that it works for any age group.
For younger people early in their career, employing a cash flow investing model can set you up for financial independence much faster than the typical 35-40+ year retirement timeline.
And for folks who are in or approaching retirement, converting a portion of your nest egg into cash flow investments can provide you with income streams that will last for decades so that you don’t have to sell off your assets and risk running out of money.
Here are the key benefits to this approach:
- Asset preservation: No need to sell your winners or deplete your savings in down years.
- Tax advantages: Much of this income can be offset, reduced, or sheltered with strategic use of LLC structures and various tax strategies.
- Confidence and flexibility: Predictable, recurring cash flow means you have flexibility for travel, family, or seizing new opportunities – all without drawing down your savings.
It’s More Simple Than It Appears
When I talk with people about the benefits of cash flow investing, they almost always see the logic in it right away. But they also have this preconceived notion that getting into these investments is difficult, complicated, and time-consuming.
The reality is that it’s none of the above.
To be fair, there is a little bit of a learning curve involved. But once you’ve got it, you’ve got it. And my experience is that managing a portfolio of cash flow investments doesn’t take any more than 40-60 minutes each month. As long as you have the right team in place, that is.
We’re going to dedicate an entire session to cash flow investing in our Bulletproof Money 3-Day Challenge next week. In it, we’ll drill into the specifics and the nuances, and I’m going to illustrate exactly how anyone can get started down this path – with some actionable takeaways for you to get started.
If you’re interested, you can get more information and register for this free online event right here: https://phoenician-league.lpages.co/3-day-challenge-registration/
Have a wonderful weekend!
-Joe Withrow