Investment advice is a sales pitch, so what are the experts selling?

Investment advice is a fee-based “one-size-fits-all” approach, clouded by a single mantra: diversify and invest for the long term.

Diversification It is a risk management technique widely used when investing in the financial markets. Experts use it to limit your losses or protect your investments against negative market movements. However, diversification doesn’t work all the time, especially during market downturns.

Long-term investment generally refers to the ‘buy and hold’ strategy. History shows that stock markets provide the best returns above inflation over the long term. The hope is that after many years, your investments will provide returns equal to the market averages.

However, there are some problems:

• Market risks are unpredictable
• Market returns are unpredictable
• Periods of negative performance reduce the benefit of compounding

Investment advice provided by financial experts is primarily focused on diversification and investing for the long term. Profits come primarily from capital gains, not cash flow.

What don’t the experts tell you?

Financial freedom depends almost entirely on cash flow, not capital gains. If you don’t have enough monthly income to meet your needs when you stop working, you won’t be able to achieve the standard of living or lifestyle you want. You can’t depend on capital gains to support you every month.

The cardinal rule of wealth creation

Financial freedom essentially depends on cash flow or passive income generation. This means that income creation is a business, not an investment.

Without cash flow, you have no business, and without business you cannot create wealth..

It’s important to ask yourself if your investments will be able to support your desired lifestyle. You must take control of your future by creating new sources of passive income. A passive income business like ownership is a powerful example of a system that works for you.

Investing in property is a business that allows you to use teams of specialists to generate multiple streams of income. You can spend around 5 hours a month running a real estate business that is worth tens or hundreds of millions of dollars.

If you miss out on the property, you may have to absorb a great deal of time and energy wasted on ineffective products and investment advice.

What is the key to income freedom?

The key is still a business system that is self-sustaining, generates monthly passive income, and gives you more time to enjoy life.