Investment Property and developing Permanent Wealth are a key parts of the 37th Parallel Properties investment philosophy and approach.
It is a slightly different concept than just net worth, and it is worth understanding the difference.
Your net worth is a function of your assets minus your liabilities and is basically your personal balance sheet. This metric — net worth — has been the de facto standard for understanding someone’s financial health for centuries.
When it comes to understanding your true financial health however, it is flawed.
Net worth does not take into account the nature of your assets, the income they produce, if any, or the quality or lack thereof of your liabilities (note: not all debt is bad).
What we have found, through hundreds of hours working with new, sophisticated and high net worth real estate investors, is that understanding their passive cash flow and income contributing assets is much more effective than just net worth.
Let me explain.
It is not about the money
Money intrinsically has no value… None. It has extrinsic value and only because it is the facilitator of two things that do matter: Time and choice.
Time and choice
Money, specifically passive income, is the greatest enabler of time freedom.
When you don’t have to worry about how you are going to cover your monthly expenses you can live the lifestyle you want with all the time freedom you need.
Volunteering at your church, starting a foundation, spending time with your children or grandchildren, traveling to wherever you want whenever you want – it is all much easier with passive income.
The more money you have, the more options you have
Owning a second home in Tuscany, a sailboat on the Caribbean, taking vacations every 3 months, building an orphanage – it is all possible with the right amount of money.
Developing Permanent Wealth is about acquiring assets that increase your net worth steadily and consistently year after year and provide passive income which increases every year.
Sounds good, right?
The only issue is that very few assets are able to offer the types of return – steadily increasing cash flow and consistent equity growth – to achieve permanent wealth. The stock market is too volatile and offers very little in the way of cash benefit. In January 2011 the stock market ended pretty much where it was in January 1997. That’s 13+ years of no growth, with a tremendous amount of volatility. It’s gone up since then, but the long term planning average for most stock based advisors still hovers around 7%.
Precious metals can provide appreciation and capital gain, but provide no current income. And, they can be quite volatile – especially at market tops.
In fact, there are several investment types that don’t work. CDs provide returns barely above inflation with no passive income. Oil and gas are depleting assets even though they have the potential to provide cash returns – albeit with volatile pricing.
The best investment class is…
The only investment we have found that provides the best mix of safety, predictability, stable cash flow and equity growth is large-apartment investments.
Imagine earning a significant investment income you can depend on
Commercial multifamily investments have a long successful track records of providing current income and equity growth better than the stock and bond market with lower volatility and better tax-advantages.
In the past access to these investments was limited to only the wealthiest of families or large institutions. By using direct fractional investing you can get access to this highly proven wealth creation vehicle.
You would be developing Permanent Wealth.
Take the next step in developing predictable wealth: schedule a consultation with 37th Parallel Properties today.