Cashflow and Compounding
What is cashflow and where does it come from?
Cashflow from investment
When you invest in property, your return is influenced by the people wanting to either live in, or buy your property for investment purposes.
For the investor, the return is also dependent on the need for people to lease the property. If people don’t want or like your property, then it is unlikely to provide favourable returns.
Similarly to business, investing provides the opportunity to leverage your time. When you go on a holiday, an investment can still provide you with cashflow. For some people they refer to this as passive income.
In its true sense, there is no such thing as passive income. All investments require a level of activity and risk, and no cashflow comes for free.
Some investments may not provide cashflow today, but may be purchased for other reasons such as capital growth or tax deductions. Capital growth is, in effect, expected future cashflow. Tax deductions are a poor reason to drive an investment decision.
