Thoughts and musings from my desk to you.

Cash Flow is Not King

We have several clients who use cash flow as the indicator of successful wealth building. I will admit, it does feel good to “clip coupons” and deposit the checks in the bank. Investors who value this metric tend to gravitate to real estate investments because it can generate rents. Real estate is also perceived as “safe” compared to stocks with their more profound price fluctuations. However, to some degree, this perception is often based on real estate market values being hidden from view due to illiquidity, not the fact that the prices are inherently stable. Stability is further in doubt when you consider that most real estate investments are levered.