Because Nobody Wants to Get Rich Slow
When Jeff Bezos asked Warren Buffet why people didn’t use his simple formula for investing. Because Buffet answered, ” nobody wants to get rich slow.”
Why slow and steady wins the race.
I know you’re tired of hearing this but slow and steady makes you rich. So why don’t people get that? Because it’s too hard to do for most people. Therefore I for one say make cash daily and it makes the slow and steady go faster.
How to speed up slow and steady.
I speed money back to me through cash flow businesses, I own. So I want money today and every day. Therefore I created a cash flow business for this purpose. This makes slow income flow like dividends easier to accept.
I don’t like waiting for cash to come in. Therefore I create daily cash flow businesses. So there are receivables in my business, it’s all prepaid cash. My average income ranges from $1200 to $3,000 per day, 365 days a year.
Fast wealth but slow income.
Wealth and income are two different things. So wealth to me is the total net worth, total assets minus total liabilities, and income is how much cash you have. Therefore income can be a very small part of my wealth because a piece of real estate for example can double in two years. So the income is only a small part of the wealth of the RE asset.
For example, the value of the Real Estate asset can go up by 10% from $950,000 to $1.1 Million or $150,000 but the income is around $30,000. Therefore the wealth can build faster than the income in this case.
Slow income but fast wealth
In the case of my foreign Real Estate investments, the income is very small but the wealth created through appreciation is very rapid. So two properties have very little income because family members live there paying no rent, but they maintain and protect the properties. The appreciation has more than doubled in 4 years. Therefore my wealth on this asset has grown by over 25% per year with little to no cash flow.
The same applies to my Apple stock that has very little dividend but very good growth which builds my wealth. Warren Buffets Berkshire Hathaway pays zero dividends but has had tremendous growth over the last 40 years. Not so much in the last 10.
My top 5 ways to increase wealth and improve cash flow
- Buy real estate in certain markets. I own domestic and foreign. All residential so far, but plans for commercial.
- Cash flow with the right assets like dividends from public companies. You have to have a lot invested because income is small here.
- I own a small income-producing business which brings in $750,000 to 1 million income per year. Nets about 37%.
- Retirement and 401K. I do not have a 401K, but do have retirement cash flow income. This has no wealth-building potential.
- I own a small trucking business too and other small companies but it’s all about cash income, not asset appreciation or wealth growth.
Income and wealth are not always related.
So Amazon stock has appreciated thousands of percentage over the last 10 years but pays me no dividend. My wealth has increased on paper but not income unless I sell part of my ownership. Once I sell I have cash but My wealth has only increased in cash, not an income-producing asset or in this case, not income-producing.
What about my small business?
Does my small asset recovery business http://hemispherestrade.com/ increase my wealth? It increases my cash flow and I believe the company is worth several million using intrinsic value. So my increased wealth is based on the market value of the assets I own.
Market value vs public value
Therefore I have privately held companies, public companies like Apple, and real estate. Public companies are easy to evaluate and RE too. Private companies are worth the cash they make and I look out over 10 years or more to realize the true value using the intrinsic value model Waren Buffet uses.
Growing wealth does not mean growing cash. Cash is a portion of my wealth but big wealth comes in the form of asset appreciation and not necessarily cash payout to me.
Mike Addis, Carlsbad California, all rights reserved.