Investment Choices To Make

The Rich Get Richer

Have you ever heard the statement, "... and the rich get richer!", and wondered why that is?  Although I am not rich, I may have some insight into why the rich get richer.  I think it is because they have mastered the skill of purchasing assets and once they have grown in value, they find ways to leverage them into more assets that provide bigger and bigger returns.  In my blog, "Ways To Reduce Debt With A Plan", I told you for me it's not about money per se, but freedom for me, so I do aspire to be rich enough to buy that for myself and my family.  Speaking of the rich getting richer, I have a little new found money that will be coming my way soon, and my plans are to increase my bounty by purchasing more assets which have the potential to generate cash flow.

Investment Choices?

In my blog post, "7 Streams Of Income", I discussed the percentage each of my streams of income currently make up of my overall income.  My goal is that my 6 other streams will combine to surpass my job's income; however, I will keep working, keep growing, keep teaching, and keep investing.  Which brings me to choices I have to make on what I will invest in next.  With the amount of money I was receiving I was thinking I need to turn that into two more sources that could generate income.  The choices I am working with is options trading, turn key real estate in coffee farms in Panama, and rental real estate right here in Houston.  At first I was strictly leaning towards buying another rental, but with houses being so much more expensive these days and the likelihood I would need to put 20% down, that would eat up a lot of my new found cash.  I love, love real estate, but I guess it's more love when it's at the right price. 

Running The Numbers

You know I had to run the numbers to see what made sense.  So, here they are below and what I was evaluating was if I did nothing my cash flow would stay $540 

(I preface this by stating this is current cash flow after previous cash out refi, and after escrow has gone back down).  Then I have the option to do another cash out refi with the run up in housing prices, and cash out some of the equity, while interest rates are relatively low and put another asset or two in play.  I have taken that option to do a cash out refi because the numbers show I have the potential to make more cash flow monthly by doing so, even with a reduction in cash flow of the previous two rental properties.  However, one set of choices yields more than the other. 

• Option#1 is purchase another rental property (one of the two listed as potential rental property) and put 20% down, but that removes the potential coffee farm and options trading opportunities if I wanted to stay within the money received from the cash out refi.

$65.35 + $66.48 + 363.75(potential rental) = $495.58
or
$65.35 + $66.48 + 377.78(potential rental) = $509.61

• Option#2 is purchase 1/2 acre parcel of a coffee farm in Panama which is deeded and use the other cash half for options trading.  This option gives me the two assets I was looking to make cash flow off of, namely cash/stock and agricultural real estate.  Moveover, the yield on this option is also more than option 1.

$65.35 + $66.48 + 416.00(options) + $316 (coffee farm) = $863.83

The difference between Option 2 and Option 1 is max $354.22 per month.  So, I decided to go with Option 2 at this point in time, with the caveat that the options trading keeps my cash kind of liquid until the right priced real estate deal does come along.  In addition, I would still be purchasing a hard asset in the turn key agricultural coffee farming business and diversifying my asset classes.  I will collect the revenue stream at harvest time or per annum, but the amounts are broken down as if they were received by month. 
 

In Closing

This is not me bragging to my readers, look at me, look at what I got or what I am going to get.  No, I am showing you, and putting the numbers to it, that purchasing an asset and managing that asset wisely can produce potentially more assets.  You can see it's not a whole lot of money, but who can use an extra $863.83 per month?  I know I can!  The other thing which I am trying to show is that investing in one asset is not where the show ends, you will need to continue to evaluate and chose to make an assortment of investments over time to build substantial wealth.   You may say, Os, you lucky, or you this or that, but know one thing, we are defined by the choices that we make everyday.  I chose to get out of consumer debt in my thirties, I chose to save my money for potential opportunities, I chose to educate myself on financial matters, I chose to live below my means, and I chose to invest.  If you like what I am doing, and want this for yourself as well, start evaluating the choices you are making and where they are leading you.  If not in the direction you want, start making different choices whether financial or in general.  It is no reason you have to settle for good when you can have great.

Poll

Help me out the poll at the top of my blog gives Option#1, Option#2, or No change.  Please vote on which option you think I should follow. 

Check out my Affiliate and Referral links here for products in services to help with investment, credit, cashback, and award travel.  Also  you can find more of my blog post on Start Here.


Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!