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.

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There are plusses and minuses to the income investing concept and methodology, so it’s best to go into your decision making with eyes wide open and a full understanding of the process.

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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.

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Pros and Cons of Investing for Cash Flow

You tend to leave more to your heirs: Since you never spend principal, you are likely to leave more money behind to your favorite heirs and charities.

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You can reach financial independence faster: Many of those who endorse the income approach to financial independence are big fans of leverage, real estate, and entrepreneurship.

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The Cons of the Income Approach on FI

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From a tax perspective, you don’t want to ever have more taxable income than you actually need to spend. It’s tax-inefficient.

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Investing in International Real Estate

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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.

There are plusses and minuses to the income investing concept and methodology, so it’s best to go into your decision making with eyes wide open and a full understanding of the process.

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.

Pros and Cons of Investing for Cash Flow

You tend to leave more to your heirs: Since you never spend principal, you are likely to leave more money behind to your favorite heirs and charities.

The Pros of the Income Approach on FI

You can reach financial independence faster: Many of those who endorse the income approach to financial independence are big fans of leverage, real estate, and entrepreneurship.

The Pros of the Income Approach on FI

The Cons of the Income Approach on FI

From a tax perspective, you don’t want to ever have more taxable income than you actually need to spend. It’s tax-inefficient.

The Cons of the Income Approach on FI

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Investing in International Real Estate

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