Asset Rich, Cash Flow Poor

Private JetMany people make the mistake of assuming that getting rich & financially free is all about accumulating assets.
This can be true as long as the assets are income producing (e.g business or positive cash flow real estate).

Often they will tell you that they need a fixed sum figure to retire on.  There are some problems associated with this strategy. What will you do with your lump sum (if you manage to obtain it in the first place)? Where will you put it? In shares? In the bank? Little by little it will be whittled away. Have you saved enough to cover your expenses if you live to be a hundred?

Focus directly on achieving a core cash flow income and any capital gain you make is a bonus. Remember you cannot live off the money tied up in your beach house or section or boat. It can also be very hard if not impossible to access it, especially in a soft real estate & stock market like we are experiencing at present.

Every year there are businesses and individuals who have a lot of money, who go bust . The reason is that they have insufficient cash flow to cover their daily operating expenses and can’t access the equity tied up in their investments.

To understand more about the importance of cash flow read Robert Kiyosaki’s books,”Rich Dad Poor Dad” and “Cash Flow Quadrant”

Advertisements
This entry was posted in Cash Flow, Financial Freedom, Rich Dad Poor Dad and tagged , . Bookmark the permalink.