Pros and Cons of Investing for Cash Flow

It’s one of the more hotly contested debates there is in investing.  Income, or cash flow, vs. total return investing.

Each camp has its proponents and detractors. But the facts are that the way most investors approach investing for cash flow leaves some things to be desired.

As our good friend Jim Dahle at The White Coat Investor explains in this post, there are plusses and minuses to the income investing concept and methodology

Pros and Cons of Investing for Cash Flow 

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The basic idea behind income investing is that you only spend the income from your investments. Seems like a great idea, right? It’s easy to know when you have enough to retire—when the income from your investments replaces the income from your job.

What Is Income Investing?

The first problem is that many income investors do not realize that a high yield does not necessarily equal a high return. You want cash flow? I can give you 10% cash flow. Give me $100, and I’ll give you $10 a year for the next 10 years.

High Yield Does Not Equal High Return

While a mortgage loan has significant benefits over a margin loan, there are many different ways to leverage up your stock market investment. In fact, you can even borrow against real estate to do so.

You Can Leverage Other Investments

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