It’s always astounding what a difference a few years of investing can
make! One of the things my wife Miel and I have been doing is actively
driving the process of how we build wealth by investing in stocks,
saving aggressively (or not so aggressively) and self managing our real
estate.
Well, this long term investing appears to be paying off in terms of higher cash flow. Back in 2005 we were getting a house down payment together. It took us about 14 months to save up $21,000.
That’s not too bad. But contrast that with today. We recently set
the goal of saving $100,000 so we can start getting serious about buying
multifamily property. So, we’ve been saving like the dickens – and
it’s working. Over the past couple of months we’ve managed to sock away
about $10,000. That’s about $5,000 per month – far more than our
savings rate back in 2005.
So what’s driving the change? In a word: assets.
Back in 2005, we only owned one investment property. Now we have
four. This has resulted in a couple of favorable advantages, including
more flexibility and increased cash flow. For example, we refinanced
one of our properties which meant we were able to skip making one
monthly payment and got our escrow funding back – this freed up
$6,029.07. Also, we are able draw on the profit from our rental
properties to add to our savings. Two months from our rental places
yielded approximately $1,408.43 in profits. The rest came from our
earned income (e.g. salaries) and we’ve been able to make some money
from our internet businesses as well ($151.61). The dollar values
aside, a major reason we are doing better now is because we have more
cash producing assets – more real estate and an internet business. I’ve always been a bit of a skeptic regarding compound interest
projections as they pertain to net worth growth, but if the last few
years are any guide, saving and investing over time can really make a
difference in your bottom line. You just gotta keep saving, investing,
reinvesting, saving and reinvesting again. Eventually the needle will
start to move.
Source: http://www.dinksfinance.com/2014/07/save-invest-reinvest-build-wealth
