Cash is King, how to Get it.
Cash is the reason I invest in companies. So let’s look at what and why cash is important and not what some people call, “trash”
You can print money
Cash is the only reason companies are in business. It’s the only reason why we work. Therefore my primary focus is to create more cash through profits. So the more sales I have the more profits I make. The more my investments make cash, the more I can invest back into the cash producing assets I own.
The purpose of any business is to produce cash. Therefore the more cash it produces the greater the value it has. Therefore I’m in business to produce cash.
Warren Buffet has 122 billion dollars in cash today. As a result of the cash his company produces. So he needs to find places to invest it, My job is the same, just on a much smaller scale. The more cash I have the more assets I can buy.
Cash is not trash
Some Youtube celebrities say “cash is trash”. It’s interesting that the 3rd richest man, Warren Buffet, says cash is what gives him comfort. Just in case a pandemic like COVID lands, those that say cash is trash run around trying to find some to stay in business.
I own real estate, less than 25% have mortgages, if I don’t collect rent, I still have to pay the mortgage. COVID allowed governments to tell renters they didn’t have to pay their rents. This March 2021, all that will come to an end. Therefore 40 million Americans, who don’t have the cash will be evicted or lose their houses.
Does that sound like cash is trash to you?
There is very little paper cash. So when I say cash I really mean digits in my bank account. Therefore the more digits I have the more income-producing assets I can buy the more cash Is produced.
More cash more equity
The more cash I generate, the more equity I create. Therefore having more cash income helps me to pay down mortgage debt for example. Therefore it produces more equity in my property. The more cash my businesses produce, the more I can reduce credit debt, the more increased the cash flow I have. So more cash means more equity and less debt.
- Publicly traded companies average dividend cash return of 2.5%.
- Reit, real estate investment trusts produce 3.9% income cash return
- My companies produce 35% net cash returns.
- My real estate produces 20% net cash returns
- Royalties almost unlimited returns once the cost of producing the book or royalty is covered.
Does cash have real value?
Cash in an of itself has no value. The only value cash has is what you can buy with it. Therefore I really trade cash for an asset. The assets I purchase are income-producing assets. So I rarely buy non-income-producing assets.
The fastest way to become poor is to purchase non-income-producing assets. So buying shoes, cars, clothes, expensive cell phones, the newest technology, are non-income-producing assets. If you require current technology to produce more income, then that’s different.
The big myth circulating out there is that cash has no value. This is totally nonsense. The reason the U.S. government handed out trillions of cash dollars is so people can eat, and pay their rent or keep their businesses afloat. So the notion that cash has no value but our government borrows trillions of dollars created by our Federal Reserve Bank to run our country is absurd.
The United States economy relies on creating debt, which is turned into cash so we can continue to have a functioning economy.
My investments rely on me to continue producing cash. Therefore the only reason I own businesses or real estate is to produce cash. So if something happens, I have ample cash to continue operating my businesses.
Is cash King or trash?
If I run out of cash then it’s king. However, since I have plenty of cash on hand it affords me peace of mind, and the ability to find and purchase undervalued income-producing assets, or investments. So these investments produce income even when I am sleeping. My goal is to continue to purchase or create income-producing assets with my cash.
In conclusion, the more income-producing assets I purchase with cash, the less I have to work. Therefore the less I have to work, the more time I have writing these blogs.