I was listening to a super interesting podcast last week on Smart Passive Income. While Pat regularly talks about building businesses, this particular podcast covered investing with his interviewee Ryan Moran.
Ryan’s investing principle was to always invest for cash flow. I’ve got to admit- I really like this idea. In fact, I liked it so much that after I was done listening to the podcast I took some action.
Here are three ideas for investing for cash flow:
One of Ryan’s strategies was to invest in Dividend stocks. Particularly, he looked for stocks that had a high dividend yield and had a track record of increasing dividend yields every year for more than ten years.
Since I am getting started by investing small amounts I opened up an account on Loyal3. Loyal3 is an online brokerage that charges absolutely no transactions fees and allows you to purchase fractional shares with as little as $10!!
The only catch is that there are less than 100 stocks available on Loyal3. Fortunately they are all big brands and since I had a limited number of stocks to choose from this actually made my job easier.
I ended up choosing these four stocks:
- Coca-Cola 3.2% Dividend Yield (52 Years of Dividend Growth)
- Target 2.8% Dividend Yield (47 Years of Dividend Growth)
- McDonalds 3.43% Dividend Yield (38 Years of Dividend Growth)
- Pepsi 2.83% Dividend Yield (32 Years of Dividend Growth)
I initially invested $25/stock with another $25/month being automatically invested in each stock. As soon as I get used to this amount I’ll go in and up my contributions.
Dividend stocks are a good cash flow investment because, well, they pay dividends! While the price of the stock you purchased could increase in value the great thing here is that you’re going to be sent a check every quarter for the dividend yield.
Obviously, to have good cash flow from dividend stocks you need to have a lot invested. Luckily, I’m investing for the long term so I still have plenty of time to do this.
The next cash flow producing investment is rental properties. I’ve toyed with this idea for years now, but I’m not sure that I want to be a landlord. However, if I could follow the steps laid out by Ryan this might just work.
Instead of managing his own properties Ryan has a property manager cover everything. He doesn’t have to worry about finding tenants, dealing with bad tenants, or maintenance or repairs.
Of course, hiring a property manager will definitely eat into your profits but if you don’t want to deal with tenants it seems to be a strategy that is well worth it.
Last on the list is a business. Businesses are (or should be) cash flow producing assets. Of course businesses definitely aren’t passive but they are one way to really accelerate income and wealth building.
Plus, if you’re able to get your business in a good spot you can hire a team who can help you run things.
Any More Ideas?
I love the idea of investing in cash flow producing assets and hope to keep inching my way to making this a reality.
With these type of investments you’re consistently receiving cash plus you still have the value of the asset should you ever need to sell it. What could be better?
Do you have any more ideas for cash flow producing investments?