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Dec 21 2008

Cattle Farmer Vs Dairy Rancher (Capital Gains Vs Cash Flow)

Or…giving it to someone else vs…creating it yourself…

Maverick here…in Alaska…and I just could not help it…I got into a discussion…with a very good friend who is also a Captain with my airline…about investing and retirement plans…

Ready to hear his plan? Work till he is 65 (he is close to 50 now) and just retire on the company’s plan…take the lump sump…put it in the bank and draw the interest…

So…what do you think I did? I got on his case…mildly…actually I went easy…just told him what I am doing…

Essentially…he gives his money to fund managers…invests for the long term…and hope for the best…he is just hoping the markets will be up (since he is buying cheaper stocks now – as he said) so he can take it and live off the interest…

What I am doing is find cash flow producing investments or businesses, invest in them…get my capital out…grow my cash flow…and find something else that produces cash flow and will let me get my money back again and do it again…I have four such vehicles now (two are already maverick targets and the other two are on short range scope – one I have mentioned directly and the other is mentioned in password protected posts for now – more on it later).

The best other example of our discussion I could find is in Chapter 2 or Robert Kiyosaki’s book, Who Took My Money (do yourself a favor and get it if you have not)…the chapter title is “Ask A Dairy Farmer And A Cattle Rancher (the wording may not be exact but the meaning is).

The other very important thing Robert Kiyosaki says (I plan on learning a lot more from him next year – which is coming in 10 days!) is that you must have a profession and your money must have a profession.

Ask yourself…do you trust someone else with your money? Why? What are they doing with it…are they telling you to invest for the long term and buy low and sell high?

Or are they using smart terms as cash flow, cash on cash return, financial statement, etc etc…?

You can do it either way…there is no right or wrong way…it is always your call…and you are responsible for the results.

Will my friend have the money when he retires? I hope so…but I choose NOT to trust these types of “professionals” with my money.

Check Six,

The Maverick

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