Retirement Income Is The Goal — Where’s The ‘How To’ Manual?

Over the years I’ve learned that capital growth tends to be perceived almost as plowin’ the fields, while cash flow is sexy as the head cheerleader on prom night. Retirement is built on years of plowin’ the investment fields diligently, while using a Plan.

BawldGuy Axiom: The farmer who plants and tends wheat in the spring and summer, isn’t surprised to be harvesting wheat in the fall. Doing things on Purpose isn’t a choice for farmers.

Bass boat

Retirement is represented well using the analogy of the farmer’s cycle. Capital growth is preparing the fields for planting, planting the seeds, watering, weeding, and the rest of the heavy lifting it takes to ensure a profitable crop. All the months of hard labor, day in and day out, lead to just a short week or two when it comes time to harvest the fruits of all that labor.

Possibly the biggest misnomer in real estate investing for retirement is that cash flow is the immediate goal. Nothing could, or should be further from the reality. Reaching out for cash flow from the start will, in fact, retard your potential for cash flow at retirement. It won’t be just a little bit either.

Cash flow is nothing but a yield on a basket of capital. The more capital, the bigger the yield. An investor with $100,000 makes the same 8% as the guy with $1 Million. We soon learn that in terms of dollars, $80,000 a year is more than $8,000. That lesson is lost on thousands of investors until they begin approaching retirement, realizing their strategy was founded upon sand, not rock.

Growing your capital for as many years as possible, usually 15-30, ultimately produces an income far superior to those who insisted on cash flow from Day 1. It’s not close.

BawldGuy Axiom: When the real estate investor goes for cash flow he inhibits the growth of his capital. Conversely, cash flow is retarded to the extent the investor goes for capital growth. It’s part of the Physics of Economics.

If your goal is to retire with the largest possible monthly income, capital growth is what you wanna be doin’ first, and for as long as possible. This ain’t rocket science by any stretch, so be skeptical of folks who try to convince you it is.

Wheat Harvest

Those approaching retirement with the largest basket of capital, retire with the nicest monthly checks. So plant and plow and tend as many fields as you can in preparation for your retirement. The bigger your harvest of capital, the more enjoyably abundant your autumn years will be. Again, not an equation I learned at M.I.T. I was never on their short list for recruitment. :)

You can start farmin’ your own capital by gettin’ a hold of me. We’ll figure out a Purposeful Plan based upon your circumstances. New here? Go up top listen to the podcasts. Have a good one.

6 thoughts on “Retirement Income Is The Goal — Where’s The ‘How To’ Manual?

  1. Tomislav Savov

    Hi,
    This is a nice article. Keeping in mind that the larger portion of the population are people that are of retirement age and the numbers are growing, it is good idea to farm for the future.
    Good points, thank you.

    RainmakerTom

    Reply
  2. BawldGuy Post author

    Thanks Tom — And readers, I’ve always wanted to write or say this.

    For all you Bulgarian real estate needs, give Tom a look see. There’s a button up top on his site for English.

    Reply
  3. Robert Coté

    I think half of the objections you see here confuse investing with speculating. The other half are me. And half of mine are issues of timing that no sane person would call anything more than opinion.

    I would make one small distinction. Investors with the discipline and/or rare tax situations could do as well with cash flow properly managed. The other 95% of us would do well to listen to your side.

    My “danger of frost” comment is but an ongoing minor difference of opinion.

    Reply
  4. BawldGuy Post author

    Robert — Ever get the feelin’ you and I are the only ones who understand that you and I simply don’t have a problem? :)

    Your point about investment/speculation is spot on. Most experienced investors know the difference, but experienced investors are a small minority indeed.

    I get what you mean my ‘rare tax situations’, but even then the before tax cash flow hasta be impressive — OR — They’re already classified as ‘professional investors’ which would still mean the before tax cash flow is impressive.

    Reply

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