With most of my portfolio, I religiously invest only in cash flowing assets.
For many years, I have been buying leveraged real estate, using sophisticated debt tools, which come with low-interest rates, and I love this strategy.
Using the maximum of a 20% down payment, the remaining 80% is financed, either by the owner himself (owner-carry, seller-backed financing) or by a more traditional lender.
The point is to make sure the tenants pay enough monthly rent to cover ALL your expenses: mortgage principal, interest payments, water, sewer, management fees, accounting, the whole nine yards. This way, you, the owner, are increasing equity using someone else’s money. It’s a beautiful thing.
I focus on properties that allow me to have a positive cash flow after all expenses are paid.
It took me a few years to perfect this strategy, but now I add two to three more properties a year, since it takes three to four months to find the right deal.
If done right, all you ever pay is the down payment, and nothing else.
I also want the compounding dividends magic of the stock market, so I invest in medium-cap companies, a specific group of companies, collectively known as “Dividend Achievers.”
In the end, cash flow is critical in today’s world.
Fixed-income investments, such as private lending and bonds are also beneficial, but I stay away from them at the moment, because of inflation risk.
The bottom line is that it is much more profitable to invest in cash flow over extended periods because assets, which can produce profits, are simply better.
However, there is room for smart speculations in my portfolio as well.
People make life-changing gains, not by owning lots of Disney shares, since that company grows at, pretty much, a predictable 8%-12% a year. It takes 30 years to see a $10,000 investment turn into $170,000, for sure.
In order to bang one out of the park, you have to take a massive risk by investing in up and coming ideas, which are not yet proven, thus to speculate that their future will be bright.
The rewards for doing this wisely are enormous, as we know from our 2017 winners, such as NEO and Cardano.
But, assets, which do not produce profits, such as the early-stage crypto projects, are also highly volatile, since investors do not see yield and move on, when the initial excitement wanes.
This is what’s happening right now.
Pure Blockchain Wealth still views these times as ultra-risky, since there must be price appreciation for drawing in new investors – a catalyst is needed, or more people will sell.
Right now, there is no big engine driving the crypto markets higher, so the selling pressure is on, and we still may see bored investors ditch the mothership.
Tokenization is a breakthrough. Blockchain is a game-changer. Global markets, which run 24/7, are an innovation.
There are plenty of factors, which we can build upon and see another parabolic rally, but this time, it will be project-specific, not a broad one, which lifts all prices, without fundamentals improving as well.
Find your winning horses, then. The rest are duds.
Best Regards,
Brad Robbins
President, PureBlockchainWealth.com