Golden Rule of Investment: Invest for Cashflow

Here is the Golden Rule of Investment – Always Invest for Cashflow.

I am telling you this Rule from my own Experiences. Most of the people loose their money while Investing because most of the people Invest for Capital Gains. While just few people win the game of Investing because they invest for the Cash flow.

Now, What it means by Investing for Capital Gains & Investing for Cashflow?

Well, when you buy something low, hold it for longer period, optimize it and later on sell it for higher price, it is known as Investing for Capital Gains. Say for Example, You buy stocks worth Rs.5000. You have buy these shares because you hope that, it will increase to Rs,10,000 after few years. Here You are Investing for Capital Gains.

Take the Example of American Housing Bubble. Literally millions of people had invested for Capital Gains since last decade. They bought the Real Estates only because hoping that, it will increase in its value. The main problem with Capital Gain strategy is, You have to follow “Buy, Hold & Pray” Strategy.

Most of the people never make Fortunes from the Internet only because they work hard for the Capital Gains and not the Cashflow. Most of these people are Flippers. Such as Website Flippers, Blog Flippers & Internet Business Flippers. They develop Blogs, Websites & Forums only for the purpose of Flipping. Investing for Capital gain is easy and it gives you the feeling of huge profits initially and that’s why most of the people around this world, attract towards this type of Investing.

Now, let us discuss something about Investing for Cashflow. Here you Invest for Cashflow means you buy any Asset because of the purpose of Cashflow. You invest your time, money & efforts in developing any Asset for the Cashflow. Say for Example, Investment in Dividend Paying Stocks. Here you invest in Dividend paying stocks for the purpose of the Regular Income (Cashflow). And that’s why even though the price of that stock goes down, you don’t have to worry about it. Because Cashflow is still flowing in.

Another Example is Rental Properties. When you Invest in Rental Properties, You are investing for Cashflow. Because once you buy that Rental Property, You don’t have to worry about the price of that Real Estate.

Let me give you my own Example. Example of this Blog. I have started “My Journey To Billionaire Club” on March 2008. Up to now, I have posted 2000+ creative & Information rich articles on this Blog. And How much I earn from this Blog every Month? Well, around US $ 30 per Month & that is Rs.1500 per Month. Now, Suppose if I had wrote 2000 Articles for some other Blog, Newspaper or Finance Magazine than I would have made Rs.10,00,000 (10 Lakhs). Than why should I focus my Time & effort for creating US $ 30 of Cashflow rather than why shouldn’t I Sell this Portfolio of Articles to someone else for Rs.10 Lakhs?

Well, Because This Cashflow is my regular Income. If I sell this Blog & its Portfolio of Articles than I will get Rs.10 Lakhs but I will lose the Regular Monthly Cashflow of US $ 30 forever. But suppose if I focus my money, time & efforts behind growing the Cashflow of this Asset (This Blog) than after couple of years, this Cashflow will be grown to sufficient level which will cover all of my Basic & Living Expenses.

Now, You will think that, than why not Cash out Rs,10 Lakhs by selling this Blog and put this Rs.10 Lakhs in Fixed Deposits that earn 8% return per Annum and generate a regular Cashflow of Rs.6666 per month? Which is far better than Rs.1500 (US $ 30) per month at present?

Well, Because if I Sell my this Asset than I won’t be able to grow my new Rs.6666 Cashflow. But at present, I can grow my current Cashflow by increasing the posting & web traffic of this Blog.

Another Best thing about Investing for Cashflow is that, as long as you hold that Asset, You can enjoy the Cashflow. You can spend that Cashflow behind your Entertainment & other purposes and the next month, you will have more Cashflow to enjoy more.

All the True Rich people around this world invest for the Cashflow. They typically invest in those Assets which provide them heavy Cashflow. Rather than Investing for Capital Gains and hoping that the price will go up in future, it is better to invest for the Cashflow….!!!!