Now it is time to make serious money! Do I have your attention? In Cash Flow 101, we talked about how much your dream retirement would cost. In Cash Flow 102, we talked about creating passive income from four pillars- retirement income, investment income, business income, and rental income.
In Cash Flow 103, we are going to find our wealth generator. A wealth generator is a source of income where we can make lots of money. Ideally, we would use a wealth generator to convert large sums of money into passive investment income (dividends). The benefit of converting our wealth generator into investment income is that now the money is entirely passive. If we want to sell our business or real estate- we can because they served their purpose. They made us rich.
But what are the best wealth generators? Well, that is tricky. Everyone is different and has a different tolerance for risk, creation, and stress. It is important to note that you do not have to sell your wealth generator if you don’t want to. You can keep it forever and pass it down to your children. For this article, we will sell our assets when we reach $5 million in investment income. $5 million would give us roughly $16,000/month of dividend income. Let’s look at various wealth generators.
Taxes 103: Real Estate for the Win!
Employment W-2 job. Jobs may be one of the slowest wealth generators out there. I believe the military or other government jobs would be the best option for a wealth generator. With enough time in service, government jobs pay well- and the kicker is that they pay you a pension. If you invest, live below your means, and stay humble- you can use your paycheck and investments to achieve this $16,000 in roughly 20-25 years.
Dividend Investing. You would need to achieve $5 million in a dividend portfolio. Using a regular job, I would give it 20-25 years.
Capital Gains Investing. Everyone’s dream is to hit it big in the stock market. Using capital gains from high-growth stocks is a way to become rich. I feel that it is risky. You would have to sell all of your investments at the right time to achieve your $5 million. I would still give it 20-25 years.
Single Family Homes. At best, a single-family home is going to earn you $500/month rental profit. You would need to own 32 houses to achieve your goal of $16,000/month. You can get into the groove very quickly; I would give it 10 years.
Apartment Building. Apartments take more financial education to leverage as a wealth generator; however- more risk, more reward. You could probably reach your goal with 5 apartment buildings as long as you grow each additional purchase’s size. It may take some time to get started, find your niche, build a team, and earn the bank’s trust, but I believe it would take you 5-7 years to achieve your goal.
Use Real Estate as Your Wealth Generator
YouTube. There is a lot of money on YouTube. You can make it big and bring home some huge paydays. If the goal is to reach $5 million and retire, 7 years is possible. Probably faster.
Books, Blogs. Writing is a good source of passive income. Writing will not be as lucrative as creating videos; however, the content can stay relevant for a longer timeframe. Meaning you can earn dividends for much, much longer. I bought and read the book “The Intelligent Investor” in 2020- released in 1949. I would give it 7 years of intense writing.
Automated Business. I consider an automated business one that can be out-soured, automated, or run by a manager. Business is tricky because it is hard to predict which one will be a winner. But if done right, using social media, blogs, audience, adding values, etc. I give it 5 years to earn an automated $16,000 month.
Don’t Gamble Your Retirement Away
What wealth generators ended up being the fastest to get us to our goals? Business and real estate. You can accomplish business income via automated business or royalties. You can build real estate income with single-family, apartments, or commercial. These all require a high level of financial education. On top of the education, you will need intelligence in each of the sub-niches of each category. For example, if you want to dig deeper into apartment buildings, there is another layer of information and skill required to make substantial investments.
Next, education in investing is mandatory. Remember, the money from our wealth generator is going into our money system. We need to make the right choices for our money system, or we will lose our money. There are ways to leverage your money system to build a higher return on investment, including options trading. Options trading will require the maximum limit of financial education, risk mitigation, and stress reduction.
As you can see, there are many ways to get us to our final goal- in this case, $16,000/month. You could also use a combination of these methods. Using multiple wealth generators may even be faster, more diversified, and recession-proof.
Cash flow is king. During the Cash Flow series, we covered how to find your cash flow number, the types of passive income, and which wealth generators will get you to your goals the fastest. The next step is to start reading (20 Books that will Make You Rich) the books of your chosen wealth generator. Reading will give you the necessary education to get started. From there, go forth and bear fruit. The world is a vast place, and everyone is capable of producing cash flow.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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