Are You Aware of the Wealth Gap?
The middle class is being destroyed, and most of us are just watching it happen.
We set out on this Quest for Cashflow about 5 years ago and thank the heavens we did.
When we first met Rob Minton, the original Cashflownaire, he had us focus on one goal: build enough monthly cashflow that is equal to twice our living expenses.
And everyday, we kept that same goal in mind. The only way to achieve that goal is by acquiring good income producing assets. We never focused on asset prices. We only focused on the income they produced.
Well over that 5 year span, the wealth gap has expanded. The rich are getting richer and the poor and middle class are getting left behind. Thankfully, we have at least kept up with the gap because of our assets. Without really noticing, our assets ballooned in value.
The figure below, published by Bloomberg, shows the wealth gap getting wider and wider from 1989 to 2019.
In 1989, the wealth gap between the top 10% and the bottom 90% of people in America was just over 10%. Today, that gap has grown to over 30%!
And if you’re surprised, you only have yourself to blame. If the gap is getting wider between you and the wealthy, you only have yourself to blame. Don’t blame the government, don’t blame rich people, don’t blame your employer. The writing has been on the wall and is still on the wall.
Asset owners are being rewarded!
And it is employees that are suffering. That yellow line in the above figure represents all the people that were comfortable with their hourly or salary jobs and either hoarded cash or bought stupid shit (tv’s, video games, those stupid furry Gucci slippers!)
So why is this happening? Why is this gap getting bigger?
We need to take a step back and understand the economics behind it.
Think about what has happened since the Great Recession in 2008. Stock markets crashed, real estate crashed, and the world looked like it was going to end. So what did our government do? They pushed liquidity back into the system by printing more money and they reduced interest rates.
What should that have told you? Your dollar was being devalued.
Now let’s look at today. Corona virus appears and the economy gets shut down. Stock markets crash and the world looks like it’s going to end. So what did our government do? Surprise surprise, they printed more money and flushed it into the system through programs like CERB and CEWS and buying up mortgage bonds. Interest rates also fell to boost the economy.
So what do we conclude? The value of our dollar will continue to depreciate. (there’s much more analysis that goes into this conclusion, but we want to keep this email at a decent length LOL).
This is why savers are losers.
That is why we STRONGLY suggest converting your excess cash into assets.
But take it even a step further, focus on converting it into INCOME PRODUCING ASSETS.
It’s easy to hand over your money to your financial adviser. Take 10% of your pay and put it in RRSPs. But sadly, there is no income to that asset. Assets get more expensive every year, and your wage stays the same. Every year, your 10% buys less and less assets.
Don’t believe us? See for yourself the gap in income growth vs. home prices in the GTA (source: Rock Star Real Estate).
Real Estate isn’t the only asset, but it is a good indicator of why the wealth gap is being created. Your income is not keeping up with asset prices and the middle class is being squeezed.
But we believe that you can bridge this gap if you acquire income producing assets. You can then use your cashflow to buy more assets. That is the stage we are in today. Our assets are buying more assets.
So what are you going to do? Are you going to let the gap get wider on you? Or are you going to do something about it?
If you are an expert in investing in assets that produce monthly cashflow, then keep doing it.
If not, every month, we share tips and tricks in investing for cashflow in our Member Only Canadian Cashflownaire Newsletter.
We share these emails in hopes of opening your eyes to a different way of thinking. A way of thinking that is abstract to average people.
Hopefully, you get something our of these emails (hint: the goal of this email is to get you to focus on building a cashflow pipeline).
If you want to take it a step further, become a Canadian Cashflownaire Member and take advantage of the wealth of knowledge we share on investing for cashflow and overall self-improvement.
Vince & Mike
P.S. Our best investment for cashflow has been our build-to-rent real estate strategy. Watch our webinar for FREE.
P.P.S. Don’t get left behind. The writing is on the wall. The government is literally telling you that your Canadian dollar is going down in value. Don’t look at this as a negative. Use this information to your advantage. Most average people will just sit back and watch the wealth gap grow bigger and bigger on them.
P.P.P.S. If you found any of this information useful, feel free to share with your friends and family. Don’t let them get squeezed out of affordability. We don’t like the way the economy is going, but we also don’t control. We just play by the rules they give us.