In traditional Wall Street financial “wisdom” and investing, advisors encourage investors to accumulate some target number or pile of cash to put into CD’s, municipal bonds and the like. What they lack though, is a plan to produce any kind of meaningful cash flow.
Wall Street Investing vs Real Estate: Which Is More Reasonable?
Consider this: someone who earns $200k per year would need to invest $10M into a 2% CD (if they can get 2%) to maintain the same standard of living and income. However, in real estate, at a return of 10%, you would need a net worth of $2M – a more reasonable sum, which many of you are probably at or on track to reach.
For those with a Wall Street “plan”, you won’t get far, especially when you don’t know when you’re going to jump off the Wall Street roller coaster. You’re leaving dollars on the table.
Like me, you may have even seen an ad on TV selling you on this plan. Telling you how much you need to earn and save for retirement, and how much you need to be a successful investor on Wall Street. You may have even heard that once you hit retirement, you should take your money off the markets because it’s not “safe” or “reliable” anymore.
If that were the case, why are we here in the first place?
Beat Wall Street Investing with Capital Assets
The problem with most traditional financial planning is that they don’t have any understanding of the regular monthly cash flow of any asset. Capital assets, such as real estate, provide cash flow. Your Apple stocks do not.
At SAO, we try a different approach. We help investors get educated on how to create passive streams of cash flow off assets with real equity value. At retirement age, you need passive income more than ever!
Here’s how I see it: passive income = financial freedom.
I truly believe there can’t be any other types of freedom, without first having financial freedom. Spending time with family, pursuing hobbies, going on mission trips, traveling, etc. Those things are not possible if you don’t have the financial freedom to walk away from your 9-5, W-2 job.
To achieve financial freedom, we need to do a bit of reverse engineering. First, how much do you need to live every month?
Say you need $10k/month. To achieve that, what amount of income do you need before taxes? How much do you need to produce to keep up with the real level of inflation (not the government-reported rate)? How do you create those streams? What kinds of assets do you need to invest in to achieve a passive income?
These are the types of questions we try to educate investors on, so they can create streams of income from capital assets that replace transactional income, rather than investing in an asset class like Wall Street that doesn’t create cash flow.
Why Alternative Investing Is Different
When you invest in Wall Street, of course, you hope it will create equity, a larger return, and will outpace inflation and taxes. But the reality is that when it doesn’t produce cash flow, you will be hard-pressed to achieve those goals.
Bottom line: invest in something that produces a monthly income! There’s nothing wrong with having CD’s and bonds in your portfolio, but it’s not a long-term plan over 20-30 years.
Want to find out more? Contact us here about investment opportunities for passive and consistent income.