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The 💵 Cash Flow Secrets I Wish I Knew at 🎉 30!
Unbroken Investing
August 18, 2024 • Estimated Reading Time: 6 minutes
Main Article Preview (Unbroken Insights): "What a 53-year-old Cash Flow Investing Expert wishes he had known at age 30"
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Unbroken Insights
I did what financial advisors train you to do. Keep in mind that for my first 10 years out of college, I WAS a financial advisor.
Set aside 3-6 months of emergency savings in an account somewhere that does nothing.
Invest X dollars per month every month so that you can have Y dollars built up by age 65 and retire.
When you invest, diversify across different assets in the stock market.
If someone had told me to focus on building passive cash flow FIRST, then it would have changed my entire financial life for the better. I got there eventually, but I really wish I had known to focus on prioritizing building passive cash flow 20 years ago.
Real estate has created wealthy people for hundreds and hundreds of years. It is one of the two best creators of wealthy people in our lifetime. With that said, is now the right time to buy? It does not matter. What I wish I had known at age 30 is that is is hard to lose money in real estate if you buy it right and have a long term plan. Even those of us who acquired real estate right before the big real estate crash of 2007 and 2008 have made money on the property we acquired then. Sure, the property value dropped for a bit—the largest real estate correction since the Depression—but we continued to receive passive cash flow and paid down the loans on the properties. The properties I acquired then have all doubled to quadrupled in value, while I received passive cash flow AND paid down most or all of the loans against the properties.
I wish I had known that most of the stock market returns you see are not accurate. Some are slightly misleading while others are pretty fraudulent. For example, when you see somebody talking about an amazing stock performer—let’s call it Nvidia—you see the amazing returns and get super excited.
However those returns were only realized by the people who bought that specific stock on one specific date and sold on another specific date. Many people got in way too late, panicked and sold when it went through a minor correction, guessed wrong again and bought after it had gone up some more, kicked themselves for selling, and so on. That process is followed by individual investors as well as professional money managers. That is why LESS THAN 20% OF PROFESSIONAL MONEY MANAGERS CAN OUTPERFORM THE S&P 500 INDEX.
If you want to take that one step further, those 20% of professional fund managers who DID outperform the S&P 500 did so before any fees were deducted. Remove their management fees, transaction fees, and others fees, and even fewer money managers can consistently give you a better NET return than the S&P 500. What is that amazing annual return of the S&P 500 index that most fund managers cannot beat? That return is historically 9.90% per year on average.
Another thing that I wish I knew is that budgeting can be easy. As much as I love numbers, I have always hated budgeting. You have to keep track of every expense every month and whether or not you stayed within the budget. I have dozens of expenses and that is just tedious.
However, a simpler way to do it is to divide your net income into three categories. One is the required expenses, such as housing, food, car payment, car insurance, etc. and the second is whatever you like to spend money on to have fun, whether that is travel, concerts, hobbies, or something else. The third category is investing and saving. Let’s say you budget 60% for essentials and 20% for fun stuff and 20% for saving and investing. As you find ways to save on the essential stuff—perhaps you find cheaper groceries—you can then allocate more to fun stuff. Perhaps you change that allocation to 50/30/20 or maybe you get to 40/40/20. That is a lot of money going to fun stuff…and a much simpler way to budget.
Lastly, these days, we are so lucky. The variety of investing opportunities we have today is amazing compared to what was available 20 years ago. One reason is technology and the internet. Another is the crowd-funding law that got passed in 2014 which makes it easier for people to create opportunities and open them up to investors.
At the same time, it is a little scarier because it is also easier for crooks to create scams. That is why it is so important to perform due diligence, be smart, and follow the right plan to take advantage of the amazing opportunities available to build passive cash flow. Those that do it right can be financially free in five years or less!
A major reason we created Unbroken Investing was to help others discover what I wish I knew when I started on my own journey towards financial freedom. Combining such education with new financial opportunities that handily outperform the stock market AND a community of peers to brainstorm and collaborate with is a big part of the Unbroken formula.
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