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"A human being is part of a whole, called by us the Universe, a part limited in time and space. He experiences himself, his thoughts and feelings, as something separated from the rest a kind of optical delusion of his consciousness. This delusion is a kind of prison for us, restricting us to our personal desires and to affection for a few persons nearest us. Our task must be to free ourselves from this prison by widening our circles of compassion to embrace all living creatures and the whole of nature in its beauty."

Albert Einstein

Which Are Better: Appreciation or Cash Flow Investments?
Friday, 18 January 2019

 If you're looking to invest do you opt for cash flow investments or an asset that will appreciate? We take a look at the different options.

Anton Ivanov wakes up knowing he's going to make a solid $10-11K this month without having to step into an office for 8 or more hours a day. His cash flow investments in rental properties have given him the freedom of passive income at the young age of 31.

This is a perfect exampling of someone living off their portfolio.

Do You Want to Live Off Your Portfolio?
Investing for appreciation is a great long term approach you shouldn't ignore. But if you want to see your money working for you every month, cash flow assets will put cash in your pocket today.
Cash flow real estate investing also has the aspect of property appreciation. Not only will you get a check from your tenants every month, if the market goes up you can cash out or roll your profits into your next property. Keep reading to learn how to trade up for bigger income properties.
1031: The Magic Number
The IRS section 1031 is a real estate investor's best friend. A 1031 exchange is an IRS rule that lets you defer paying taxes, leaving you with more capital going forward than if you sold your property, paid all the taxes, then bought another property.
A 1031 exchange takes advantage of both appreciation and cash flow. And regardless of your strategy, all investors share the desire to build their wealth.
As your properties appreciate in value, the cash flow will increase. You can pass on these properties to your heirs so they can continue to increase their net worth. This is how some of the richest families amassed their fortunes.
Building Wealth with Cash Flow Investments
Real estate can appreciate in value while providing cash flow along the way. "Don't wait to buy real estate," advises legendary syndicated columnist Will Rogers, "buy real estate and wait."
Will was spouting real estate as an investment long before there was a plethora of information on it. When you invest for income, you get rewarded on a regular basis rather than waiting for appreciation alone.
Of course, investing for cash flow can go wrong. When it comes to investments like rental properties, expenses can quickly add up. Don't buy properties with expenses that outweigh the profit.
It's not unusual for some months to be cash negative due to maintenance. But your investments should put money into your account more than they take out. A property can become cash negative due to natural disasters and market trends as well. Be sure to consider these factors before spending any money.
So Which Is Better?
So how do you grow your capital the way 31-year-old Anton did? Cash flow investing. Appreciation will come along for the ride but don't make it your main focus. Cash flow investments are great for beginners because you see the fruits of your labor long before cashing out.
And remember to follow the rules. Mismanaging your cash flow could result in back taxes, lack of cash reserves, and unplanned expenses. Read this article now to make sure you're not making these cash flow mistakes.
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