Wealth Series-Cash Flow

On the level of personal finance, cash flow is first of all an asset in the form of cash, and it is also money that keeps flowing every month. For example, the monthly fixed salary is cash flow, the rent of house rental is cash flow, the fixed dividend of stock is cash flow, and the annual interest of fixed income products is also cash flow. Cash flow must first meet high liquidity, then be stable for a long time, and finally it is best to have your passive income or even run automatically.

So if your bank account has 1 10,000 for a long time, is this cash flow? This is not. This is the cash pool. You can scoop water from the pool at any time, but this is not cash flow. It's good for you not to flow.

A healthy cash flow means a good financial situation. Good cash flow planning can not only make money meet all kinds of life needs and ensure the quality of life, but also make assets flow with it and generate more and more income. It can be said that good cash flow is a bridge between investment and life, and it is also the cornerstone of the wealth building.

In the law of wealth, stable cash flow is the basis of building assets. When we can get stable cash flow from active income, the first step is to build assets and new cash flow with cash flow and accumulate wealth step by step. But in the beginning, cash flow takes precedence over assets. I would rather have no cash than no assets and cash flow first.

If wealth is compared to a giant, then cash flow, like blood, keeps flowing in the body and delivers nutrition to his body. If there is something wrong with cash flow, just like impurities in blood, it will bring diseases to giants. And assets are like the bones of giants. Without bones, giants can't feed themselves, walk and grow continuously. Your investment ability is the muscle of a giant, which is a process that needs constant exercise and getting stronger and stronger. Finally, financial quotient is the brain of a giant, directing all actions.

The meaning of cash flow

Cash flow is one of the most important secrets in our wealth law. In the process of everyone's wealth accumulation, cash flow plays a vital role. In summary, there are the following points.

First, a stable cash flow is a prerequisite for your investment. In other words, when you have a stable cash flow, you can invest.

Why? Because first you have to have original capital and principal, right? Then the existence of cash flow will help you constantly enrich your cash pool to support your first investment.

Secondly, a stable cash flow is the key to your continuous investment. Enriching the original capital is only the first step. The next investment should continue, and the return can only be seen when the investment is stable to a certain extent. If you don't fight, you will probably waste the money you have invested, just like the plane flies a little, stops a little, flies a little, stops a little, but it will never fly, wasting a lot of oil.

Note here that when we talk about stable cash flow, there must be a balance, which is discretionary cash flow. Unlike the friend I mentioned before, he runs his own factory and earns tens of millions a year, but if he earns100000, he has to invest100000 in the factory. In order to expand production, he earned as much as possible, and then constantly recruited employees and built new delivery rooms, and all aspects of investment never stopped. At this point, the enterprise has no disposable cash flow. Many times, after deducting various expenses, the company finally has almost no money left.

This is not your cash flow either. Although money flows every month, you can't take it out or you can only sell it. This is also very dangerous. Once you have risks or liabilities, you can only mortgage assets.

Second, cash flow is the embodiment of your productivity, which means that your credit value is related to your financing leverage.

Because financing is a key step for us to expand our wealth, cash flow represents your repayment ability. With cash flow, you can use monthly payments to support leverage.

For example, if you want to invest in a project and get a loan from a bank, the bank will see how much your monthly flow is, whether it is stable, how many assets you have, how much you can mortgage, and so on. By reading these, he will evaluate your repayment ability. If you are strong, he will be willing to lend you money, so that you can better turn over your investment projects.

Third, cash flow is the embodiment of your load capacity, that is, the ability to take high risks and the ability to repair debts.

Because in the later period, the greater your cash flow, the more radical your investment strategy, and the greater the risk you face. At this time, your repair speed is extremely critical. On the one hand, cash flow can be used to flexibly reduce leverage and risk. On the other hand, once you lose money, cash flow is the cure for you.

For example, if your monthly cash flow income is 65,438+10,000-200,000, and you have 500,000 cash to invest in a project, once you lose money, you only need to wait for 3-5 months, or you can recover it in a shorter time by other means. At this time, you can invest your money more effectively because you can afford it. But if your cash flow today is only 3,000 yuan per month, and then you want to invest in a 500,000 project, you can't afford to lose. Once you lose money for a few years, you can't turn over.

Fourth, cash flow is eggs, and eggs can be turned into chickens. Cash flow makes us farmers with compound interest.

We mentioned earlier that assets can bring us benefits, and stable benefits can be used for the next asset allocation. Let chickens lay eggs, eggs regenerate chickens, and chickens lay more eggs. After accumulating a certain amount of wealth, many rich people can't spend it so easily in their lives. It is because in the period of sufficient cash flow, a large number of interest-bearing assets are allocated, so that in the future, if you do nothing every day, you will also have rich income.

Fifth, cash flow can also promote our benign consumption. For example, I am very restrained about my daily consumption. I made a rule for myself, that is, if I want to buy a watch today, for example, it will cost 50 thousand, then I must have the cash flow income of 50 thousand before I will consider spending it. If not, I will establish a cash flow income of 50 thousand for this watch.

It means that if you want to eat eggs, please buy a chicken first. If you want to spend money, you must find its cash flow for this money. Conversely, ask yourself, your cash flow will increase. That's what I did. Although it seems a little stingy, you will find that the more you want to spend money, the more you have to force yourself to find new cash flow. Then the result is that the more money you spend, the richer you will be.

Sixth, cash flow is the bullet of your speculation. Speculation is a high-risk and high-return investment method. If you want to get excess returns, you must be able to resist excess risks. A stable cash flow can help you wait patiently for the probability of speculation.

To sum up, ordinary people pay attention to cash, while the rich pay attention to cash flow. We have a preliminary understanding of what cash flow is and how important it is to our wealth accumulation.

PS: Thanks to Mr. Zhao Zhong for his contribution to the above courses.