Aren't you tired of economic recessions, a never-ending inflation and double digit unemployment? Let's face it, the world's economic climate is constantly changing, and each new recession seems to last longer than the one before it. To survive and prosper, you need to be financially educated. That's why, in this article, I will look at certain concepts related to the US economic climate and provide a detailed description of how you can take advantage of constant economic recessions and continually rising prices. Let's get down to it.
Concept # 1: You should always improve and grow.
It is essential to stay frequently updated with the newest ideas and concepts in the area of investing rather than clinging to the old ways of doing things. Let's say you are about to get a job interview. You have no doubts about the positive result of the interview. You don't worry about the fact that the most recent computer class you had taken was almost twenty four years ago. How much do you think the things have changed since then? You probably know everything about floppy discs, dial-up modems, etc. You are confident in your knowledge! However, to your surprise, the company needs to know your skills in the field of things you've never heard before, such as social media, cloud technology and SEO. Uh-oh what???
Now, I want you to think in the same way about the field of investing and finance. The financial concepts that could be applied yesterday, last year, last month, are completely inadequate in today's economy. Never ending changes is the only thing you may be sure of in the modern financial climate. You need to keep your economic expertise current or the repercussions to your cashflow could be unpleasant at best or totally wrecking at worst! I hope you get the point. Keeping up to date could mean the difference between your economic life or death.
Concept # 2: Savings are absolutely crucial, but hoarding cash will bankrupt you in the long run.
Let's compare cash to milk. You always need to have some milk in the refrigerator, but it has a relatively short expiration date. Unfortunately, your money has an expiration date too! The US government is doing every little thing it can to slowly and steadily devalue the worth of the US dollar. Why slowly and steadily? Eroding the US dollar too quickly would lead to public unrest. However, as the value is gradually diminished, two great things happen: the US exports become cheaper in the global market and the U.S. debt becomes a lot more manageable. The US government could only pay the debt by devaluing (inflating) the US dollar.
What does this information give you? You should understand that while it's true that money savings may give you a certain level of monetary safety, you need to remember that cash is being constantly devalued due to an endlessly rising inflation. You have to put aside adequate amount of cash to help you get through the difficult times in case you lose your employment. However, as soon as you have your cash safety blanket in place, excess cash and non-inflation adjusted cashflow turn into LIABILITY because it is constantly going down in value.
While the US government is attempting to keep the rising cost of living at a certain level (typically 2-3 %), they need to increase the volume of cash in the economy during tough financial times when the companies are struggling to stay afloat and require added supply of cash to keep going. The next round of cash printing could be coming in the near future as the government will certainly try to shore up the value of real estate which may lead to increased prices and you will be required to pay more for food and other goods and services.
Without an adequate quantity of money in your savings account, it will be tough for you to survive in the times of emergency. However, if your major financial investment focuses on accumulating cash reserves in your savings accounts and CDs only, you will get financially destroyed by the upcoming inflation in the long run. I hope you get the point. Savings are good in moderation. You need some for emergencies but that's about all you need. The rest must be invested in other assets, preferably Real Estate and businesses.
Concept # 3: Create numerous sources of inflation adjusted cashflow.
Creating an inflation-resistant cashflow stream can offers you freedom, simplicity, and control over your financial resources. Investments that generate inflation-resistant cashflow can easily avoid the ups and downs that give heartburn to investors who are solely concentrated on building a high level of equity. If you own a functional lemonade making machine but it is not turned on, you might as well not even own it. You need to convert idle equity into a cashflow producing asset. You should turn the heaps of unproductive cash into the cash flow stream. There are a great deal of "affluent" individuals going bankrupt because they planned on liquidating assets to cover their cash flow needs. But your grocer will not accept a part of your equity as a form of payment; the grocer will only accept cash. You don't want to wind up in a scenario when you need to liquidate your asset just so that you can buy groceries. You only want to liquidate your equity at the top of the market when you are confident the price is good.
So, are you ready to take action and start acquiring positive cashflow generating assets? Many financial experts will agree that real estate investing is the best way to build wealth.
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