Most people are only familiar with capital gains investing (including windfalls). In other words they are focused on trying to get rich. When you focus on investing for cash flow, you are focused on building your wealth, creating passive income that earns you money without depleting or selling the original asset.
I used to prefer a high annualized return, despite a long wait, such as Chinese properties, land banking products, forestry,,, but in my 40’s I feel I need current income to provide for education, better commute, better home, recreation, self-growth, interest, hobbies, … I have experienced a few show-down cases of current income vs far-out windfall , that shaped my perceptions and preferences.
- eg 🙁 land-oriented investment is advocated by Alan Shi, but such a remote location has low rental demand. Low current income. In fact, automobile burn rate could be higher. I probably won’t like it.
- eg 🙁 life insurance — zero income for an extremely long “wait”
- eg 🙁 endowment plans such as Manulife Universal Life — zero current income + paltry return
- eg 🙁 land banking promising a windfall? I don’t think there’s any current income.
- eg 🙁 Allianz IncomeProtector — zero current income + delayed high income. I don’t like it because I need income now, not later.
- xp: monthly payout — funds on FSM. Overall not impressive since most of the current income seems to come from the NAV
- xp: Energy 12 — good guaranteed current income + some appreciation potential
- xp (long): #4-116 — huge appreciation (Realized!) + current income (in terms of realized rental since 2005 + my rental savings). So this is the #1 biggest success story in my entire life.
- xp (long): Beijing property — huge appreciation + zero current income for me but indirectly my parents are enjoying the rent-free benefits. This is the 2nd biggest successful story.
- xp: BridgeRetail — high current income (Realized!) + long-term appreciation potential.
- xp: PeakRetail — lower current income, bigger potential for windfall
- xp: BGC — promising current income + long-term appreciation potential.
- xp: Goldman Sachs dividends
- xp: My 2009 Roth401k voluntary contribution was a regrettable decision. The money is now locked-up when I need it (now). When the money someday gets unlocked, I won’t need it as much as now.
I have concerns over the long wait for a “windfall” (I have never been convinced to buy any):
- With such a long horizon, things may not work out as planned. The more “guaranteed”, the smaller the windfall, like the /paltry returns/ of insurance products. On the other extreme, the big windfall of land banking often disappoints investors
- our health? Wife or I might get a condition too early and can’t really enjoy the windfall. Even if we can enjoy it at that advanced age, I don’t want to wait for that time, in poor health.
- my lifespan? If the windfall comes at 67, I have a few decades to enjoy it, but I would rather get the windfall 40 years before end of life.
- inflation? Singapore is OK so far. U.S. is less stable.