Have you ever noticed how some people seem to be natural moneymakers?
You know who I’m talking about. The kind of folks who just attract wealth like big old money magnets.
I remember one of these guys who used to work with my father, way back when I was just a nipper.
We’ll call him Davey.
Davey had the exact same job as my old man. Rose up through the ranks at the same pace too. But you could always tell his family had a lot more money than ours.
Flashy cars. Expensive clothes. Big house in the same neighborhood as our three-bed bungalow — he had a whole bunch of houses all over town actually.
It drove my father crazy.
Even if Davey was an expert negotiator — and was drawing down a much larger salary than my old man — the wealth gap was unbelievable to me as a kid.
My father only stoked my curiosity with these wild conspiracy theories he’d spin at the dinner table. As the kids cleared the dishes, he’d pour himself a beer, lean back in his chair, and tell us he’d finally cracked it.
Sometimes it was a secret inheritance left by a fabulously wealthy relative. Other times, the old man said it was “obviously” tax evasion… or stealing from their clients.
If the whiskey was on the table — as it often was around the holidays, when my father would worry almost obsessively about money — bank heists and pirates’ treasure weren’t out of the question.
Over the years, he cooked up some Spielberg-worthy tales.
As a kid, I believed them all.
But looking back now, I don’t think there was any secret trust funds or pirates’ treasure or summers spent panning for gold in the Yukon.
I think Davey just knew a secret about making money… something my father couldn’t even fathom… and it has everything to do with all those houses he owned around town.
Robert Kiyosaki, the author of the #1 bestselling financial book of all time, reveals that secret in today’s issue of Money & Crisis.
All the best,
Editor, Money & Crisis
P.S. Below is just one of the many income secrets Robert used to make his millions over the years. Right now, Robert is giving readers access to 49 of his most coveted income secrets. All it takes is a couple of these secrets to generate $1,168, $2,551, and even $4,377 in safe and predictable cash flow week in, week out.
Cash Flow Is King (and Queen)
By Robert Kiyosaki
In the world of investing there are primarily two things people invest for: capital gains and cash flow.
What’s the difference?
Capital gains are the one-time profit you make on the sale of an investment.
For example, you buy five shares of a stock for a total of $100. Those shares go up in value to $150. You sell your shares. The $50 profit you make from the sale of your shares is capital gains.
The same applies to real estate. You buy a house for $100,000. You fix it up and sell it for $140,000. The $40,000 profit is capital gains.
But in order to realize any capital gains, you have to sell the asset. Plus, on those gains, you are going to have to pay taxes. And, you can also have a capital loss if you lose money on the sale of the asset.
A capital gains strategy assumes an appreciating or uptrending market. In order for you to make a profit the asset has to go up in value. Someone must pay you more than what you paid for it.
Cash flow is an ongoing stream of income you receive from an investment. You may receive this money on a monthly, quarterly or annual basis, depending on the investment.
Whereas the strategy behind capital gains is to buy and sell, the strategy behind cash flow is to buy and hold.
You buy a stock that pays you a dividend every year. That dividend is cash flow.
You loan money to a new start-up business. Each month the business pays you interest on your loan. That interest is cash flow.
You buy a house and rent it out. That monthly rent is cash flow.
Essentially, you own an asset, you keep it, and collect money off it at the same time. Those assets can also appreciate and end up giving you capital gains, as well, once you do sell.
But having cash flow from your assets doesn’t just make you richer on paper, it makes you richer in real time with real cash.
Cash flow is what most buy-and-hold real estate investors are after.
For example, you buy a six-unit apartment building and you rent out each of the units. Every month you collect the rent, pay the operating expenses and the mortgage, and, if you’ve managed the property well, you end up with positive cash flow.
Is it possible to have a negative cash flow? Absolutely. That’s why having a strong financial foundation is so important. So that you can choose investments that generate positive cash flow.
One of the beautiful things about the Rich Dad formula is that you don’t need to acquire hundreds of thousands of dollars in savings. You simply need to build up your monthly cash flow to be greater than your living expenses.
For example, when my wife and I “retired” in 1994, we did not have millions stashed aside. What we had was $10,000 in cash flow coming in every month from our investments, primarily real estate. The beauty was that our living expenses were only $3,000 per month.
At that point, we were free. The cash flow from our investments was more than paying for all of our living expenses.
One more advantage of focusing on cash flow is that it eliminates the fear of running out of money. One fear I hear from people who have retired is, “I don’t know if the money I have set aside for retirement will be enough to last through my retirement.”
By accumulating assets that provide a monthly cash flow, money comes in every month until you decide to sell the asset(s).
A financially secure and independent investor loves his or her cash flow. They know that they can depend on their cash flow, not someone else, for their financial well-being.
Play it smart,
Editor’s note: Robert’s billionaire income trick could help you grow your income as much as $7,917 per month with one simple move. Even Warren Buffett has been known to use this approach. Click Here for this simple strategy and 48 more of Robert’s secret income tricks.