It’s a given that the goal of investing is to build wealth. Money to fuel a time when you won’t be working as much or at all, such as retirement. But instead of being decades in the future, what if this time is now? You want to buy back your days by designing a lifestyle that supports greater flexibility and fewer financial worries.
Your investment goal is to build a time-rich lifestyle with regular cash flow you can use today, rather than assets that will appreciate for tomorrow’s needs. It’s a different type of strategy that requires ignoring some of the conventional advice. You’ll focus on hands-off, well-established, turnkey, and higher-cash-yield opportunities so you can enjoy the non-financial perks life has to offer. Here’s how this approach can support a time-rich, purpose-driven lifestyle.
Alternative Investments
The word investments automatically brings to mind what you can buy on Wall Street. The latest trending stocks, bonds, and mutual funds. While some of these well-known assets pay dividends, they’re unlikely to be sufficient enough to replace your current income alone. No, Wall Street investments tend to appreciate over time, adding to the value of a portfolio you can access later.
Alternative investments, such as gold, silver, and other precious metals, are assets you can liquidate at any time. Adding these to your investment strategy is equivalent to having cash in the bank that can grow in value. While you won’t get a monthly interest payment from a financial institution, the value of those metals can create a buffer. When you need extra cash flow, you can exchange gold and other precious metals for money without waiting.
There’s no early withdrawal or cash-out penalty before the age of 59 and a half. It’s not a 401(k) loan you have to pay back, either. Gold, in particular, can also help you hedge against inflation since its value tends to rise with the cost of living. In addition, demand for gold tends to rise when the broader economy is struggling. While you don’t want to allocate your entire portfolio to a single investment type, you can allocate a percentage you’re comfortable with.
For example, around 1% is the benchmark most wealthier families use. As Lifestyle Investing expert, Justin Donald, says about cashflow investing, “What is one step you can take today to move towards financial freedom, to move towards a life that you truly desire on your terms, not a life by default, which most people have, but actually a life by design?” Having an investment you can easily convert to cash today is one such step.
High-Yield Investments
When you do invest in Wall Street, you want to focus on high-growth, high-yield assets. These are the investments that pay cash dividends at returns of at least 4% per year. If you don’t want to take the risk associated with more speculative stocks, you can use a high-yield savings account. Traditional, larger banks are less likely to offer these yields, though. You’ll want to search rates at credit unions and digital institutions instead.
However, keep in mind that banks tend to adjust savings account rates in line with federal rates. When federal rates go down or hold steady, so does your savings account’s annual percentage yield. Typically, fed rates go up to curb inflation and go down when the economy shows signs of weakness.
Speculative stocks, preferred shares, and dividend-paying assets don’t always follow the same trajectory. You could earn more than 4% annually in dividend payouts, whereas a high-yield savings account may not exceed that. Research financial publications for investments with a record of high annual dividends. Also, look at the history of those payouts. Does the asset have a steady track record or only one to two years with good yields?
Another metric to research is dividend growth. Are the asset’s dividend payouts holding steady or growing year over year? To build a time-rich lifestyle, you want your cash flows to keep up with inflation and changing needs. As with alternative investments, high-yield assets will likely make up a portion of your portfolio, but optimizing for cash flow growth remains the goal.
Passive Real Estate Opportunities
Real estate can produce steady cash flow from rent payments and fees. There are also lump-sum payments when you sell properties or when you sell ownership shares. Before you discard the idea of real estate because you don’t want the headaches associated with property management, know that there are hands-off opportunities.
These come in the form of real estate investment trusts or REITs, syndications, and crowdfunding. REITs work similarly to other Wall Street investments. You purchase a certain number of shares, reaping the rewards of annual dividend payments and one-time gains when you sell them. An investment manager selects the properties, and someone else handles the day-to-day operational strife.
There are also ways investors can save to fund their real estate investments, such as through life insurance contracts. For instance, M.C. Laubscher, founder of Cashflow Ninja, spoke in a podcast about how strategies like life insurance contracts build capital, saying, “You build up your equity in the policies that if you need it, you can access the capital through policy loans, like a line of credit, tax free, and then use that to go and invest in buying more real estate.”
Real estate syndications, on the other hand, usually require networking and building relationships with other investors willing to take on the duties of being active partners. Active partners are those who scout, select, and manage properties. Passive partners contribute a percentage of the funds needed to acquire and maintain the properties. In return, passive investors get the same percentage of the profits. Cash flow comes in without lifting a finger.
Crowdfunding platforms are somewhere between REITs and syndications. These opportunities are open to the public, and you can research a property’s historical average returns before you invest. But you’re contributing a share of the funds needed to acquire and/or maintain select properties. Unlike syndications, you can start investing with less than $20, depending on the platform. You typically get quarterly payouts, but don’t have to manage the properties.
Overall, creating a time-rich lifestyle means building passive income streams so you’re less dependent on clocking hours at a W-2 job. The goal is to have more freedom to pursue passion projects, spend time with loved ones, and participate in activities that make you feel alive. Although work can be meaningful, you probably dream of a life you can live rather than just get through.
Cash flow investing is one way to achieve your goal, and it’s highly attainable if you know how to execute it well. Putting the approach into practice requires shifting the focus from asset appreciation to short- and long-term payouts. It also means considering hedging against inflation and identifying assets you could liquidate tomorrow if needed. But like any investment goal, creating regular cash flow is something you can achieve with thought and diligence.
