I've been writing a series on the importance of cash flow and how you can achieve wealth by focusing on cash flow (especially passive cash flow!) instead of "saving your way to wealth".
But there's one more thing I absolutely must talk about – and if you've been following closely, you'll probably already be thinking about this:
And now you have money coming in. Good. But all of a sudden, you end up with EXCESS CASH. (Not a bad problem to have!)
So what do you do with all your cash?
Some people will tell you to sock it away in investments and save for retirement. Others will tell you that you need to convert it to gold and bury it in your backyard because the economy is on life support.
I'm not a financial advisor so I'm not giving financial advice here but I can tell you what I do with some of my money:
I invest in more deals. (Hey, that's why I'm called The DM, right?). In some situations I'll invest in more real estate (but only in some situations because remember: I want to manage my risk and reduce how much personal cash I have at stake in any one deal). And, I'll invest in other businesses where I think there is an opportunity and where I can help other people become successful.
I don't believe in saving for retirement in the traditional sense because...
- That locks up money until retirement (no liquidity)
- That money is in investments that I have no control over (no control)
- Investments may make money when they're sold but they don't earn a lot of dividends on an ongoing basis (no cash flow)
... On the other hand, investing in real estate or other businesses provides the liquidity, control, and cash flow that I need to continue growing my "DM Empire" to fund my "DN lifestyle".
Okay, don't run to your investment broker and swallow your stock market losses and cash out your 401(k) tomorrow (and if you do, DEFINITELY do not give your investment broker my name :) !). Instead, start by doing a deal. Just get out there and get a deal under contract and find an investor-buyer and get a deal. Just do one. Take action and start with that. (By the way: There is an awesome opportunity you can use known as Self Directed IRA’s... We’ll be talking a whole lot more about this powerful tool you have access to.)
Now after you've taken action and one one deal...
Then do it again and again and again.
If you keep doing that, you'll get to a point where you will barely even think of your 401(k) and the cash you have in there will be a tiny shadow of what you earn each month simply by doing nothing.
Your investing-for-retirement friend and mentor,
Mark Evans DM,DN