Investing for Cashflow Rather than Capital Gains

Investing for Cashflow Rather than Capital Gains

Recently I have posted the Article: Cashflow Versus Capital Gains

You can read this article. In the article, I have mentioned in detail that why is it better to invest for the cashflow rather than Capital Gains? Cashflow is a better investment strategy rather than capital gains.

Most of the people invest for Capital gains and that’s why they find Capital Gains Investment strategy risky. I personally prefer Cashflow Strategy for Investments rather than Capital Gains.

Remember when people say,

- My house has appreciated in value or

- The Stock market is going Up,

They are investing for Capital Gains. The main problem with investing for Capital Gains is that, You don’t have control over anything. You invest in something because you think that the price will go up. While the Intelligent Investors invest for Cashflow and that’s why even though the market (Stock or Housing) goes down, they will still continue making money on their Investments.

All the financial products are designed based on Capital Gains Investment Strategy and that’s why they offer you mouth watering offers such as Mutual Funds, Pension Plans, Retirement Schemes, ULIPs, Insurance Products and many others.

When you buy a stock or a real estate hoping that the price will go up in the near or long future, you are not investing but you are speculating. This is a “Buy, Hold & Pray” Strategy. Generally people invest in something hoping that the price will go up and they will make huge profits.

Well, This is extremely risky. The Smart Investors invest for Cashflow and not for Capital Gains.

Read here What Robert T. Kiyosaki says about Capital Gains & Cashflow Strategy

“One of the reasons I was able to retire at age 47, and my wife, Kim, at 37, was simply because we had enough cash flow coming in (primarily from our real estate investments). It wasn’t much — about $10,000 a month — but we only had about $3,000 in monthly expenses. That left us with $7,000 a month to do with as we pleased.

On the other hand, capital gains are when you buy a stock for a dollar, and it goes up to $10 so you make $9 a share. Or, you buy a house for $100,000, and it appreciates to $150,000. You sell it and make $50,000.

Robert is a Ney York Times Best Selling Author of the Book “Rich Dad Poor Dad”

“One of the reasons people do not become financially free is because most of them are focusing on capital gains rather than cash flow. Chasing capital gains alone is gambling — not investing. Want proof? You don’t have to go back very far to find it: Between 2000 and 2003, millions of investors lost trillions of dollars in the stock market.

Robert Kiyosaki agreed that:

The key to financial intelligence is how to use both cash flow and capital gains to grow wealthy. So many people are not successful, because they’re generally focusing on only one of the two. The  majority is focusing on capital gains.