Most investors look for capital gains when investing in the market. In essence, they are banking on the asset price going up. This is great, until the stock prices start declining. Successful investors look for cash flow, where capital gains are just an additional benefit. This strategy broadens your investment options, from basics like investing in stock and bonds, to more sophisticated opportunities of investing in derivatives, options or real estate. You can even further leverage your ability to invest by using loans and investing on margin, although this strategy is only recommended for seriously experienced investors.
- You can learn how to invest with an eye on getting cash instead of just gains.
- Cash flow happens when a purchase gives you a cash return during the time you own it, instead of just in a sale at the end.
- You can use things like derivatives to ensure a cash flow when you invest.
“Instead of investing for capital gains, the wealthy learn how to invest for cash flow, even in the stock market.”