Every year, we like to set out our cashflow plan. Most Canadians have what is called a financial plan. But most Canadians have no financial freedom. This is because they don’t have cashflow in their lives. Thus, we strongly encourage other Canadian to adopt a cashflow plan.
So, with the understanding of this, here is our 5-point cashflow plan for 2023 and beyond as investors here in Canada, looking to live in the Position of FU.
1) Focus on cashflow
This is embedded in our minds. Everyday, we look for opportunities to build extra cashflow in our lives. Every year, we continue to work on building income equal to twice our living expenses. Cashflow brings extra income into our lives, which, in turn, brings us time and financial freedom. We love income properties and businesses, but as you know you can earn cashflow in many different ways, like dividend stocks, land rentals, walnut trees (if you know, you know), etc. There are so many ways to build cashflow in your lives. Find the best approach that works for you. Trust us, if you make the effort, the results will come. For more ideas, check out these 7 cashflow investments.
2) Ensure you have cash or access to it
This means saving some up or ensuring you have access to a line of credit. The financial system is a system of trust. We trust that the bank will give us our money when we ask for it. But if there ever is a run on banks, where every Canadian rushes to empty their bank accounts, that will trigger a situation where the bank cannot give you your money (ie. The scene from It’s a Wonderful Life, where every person rushes to get their money from George Bailey’s bank). The one thing that could stop you in your tracks is if you do not have access to cash if things in the world go south. Cash or access to it is one of your short-term safety blankets.
3) Secure some cash in hard money
Think gold, silver and bitcoin. Do your research and figure out which one you like best. Personally, we allocate 10% of our cash savings to gold, silver and Bitcoin. We are currently still heavily weighted in metals, but we have been aggressively buying Bitcoin the last few years. We include this step in our plan because while we need cash to function (buy things, pay taxes, etc.), cash is also being manipulated so badly that it is losing value at an astronomical rate because of quantitative easing. Simply put, quantitative easing allows central banks to increase the money supply. For every new dollar created, the value of the dollar diminishes. To combat this problem, we suggest carrying some hard money in your portfolio, like gold, silver and/or bitcoin. We believe that once you have the cash reserves necessary for emergency, you should not carry a cent more.
4) Acquire Hard, Income-Producing Assets
As cash depreciates, hard assets hold their value. They look like they are rising in value, but it really is the land that requires more dollar bills to buy it. If the asset produces income, it is a win-win. If there is a temporary blip in asset prices, the income will get you through it. A perfect example of a hard, income-producing asset is a rental property. A rental property demands income through rental payments. The land underneath that property holds its value through inflation. Thus, a hard, income-producing asset helps you build income and achieve financial freedom, while also preserving your wealth in inflationary times. It’s why we have focused so heavily on our build-to-rent strategy, which is a strategy where we build equity by building rental properties, and we earn cashflow by renting the property out. Every cashflow investor needs hard, income-producing assets in their life.
5) Have a long-term perspective
As the past few years have shown, anything can cause the world to change in an instant. It has also shown that society often panics and over-reacts. If you rely on a short-term investment, you could get burned. That is why we love the Cashflownaire plan, because it focuses on achieving freedom early, but it is definitely not a get rich quick scheme. It takes hard work, discipline, sacrifice, and long-term thinking. As we focus on cashflow, we forget about the inevitable jumps and dips in markets. Assets go way up, and they come way back down. But if they produce steady, reliable cashflow, then we can ignore the short-term blips. And we can use the cashflow to buy more cashflow during downturns.
This is the 5-point plan we will follow as cashflow investors. If you stick to this 5-point plan, you should be achieving financial freedom in no time!
Vince & Mike