Cash is King

Cash is King. It is as true to today as at any other time in the past. But for the best part of 30 years, investors, governments and the advice industry worldwide has been mesmerised by the pursuit of capital gains. Schemes involving negative gearing, tax environments favouring capital gains over income and religious belief that asset prices always increase, has left a generation of baby boomers decimated by an untimely, “once in a life time” global investment and financial crisis. For the lucky ones who still have their nest eggs largely intact, most still face the prospect of an uncertain future, as doubts surround the sustainability of current asset values, many of which yield little income if any income at all.

We doubt this is what many retirees would call financial freedom?

We have been told that in the long term, assets values always increase. However, as many are beginning to realise, the long term is a very long time.

What good is it being asset rich when you can’t afford to put food on the table? Many retirees are beginning to realise that is not what your asset is worth that is important, but what that asset pays you for owning it.

Typical asset allocation and investment strategies advocated by many industry experts and educators, have long preached that as a wealth accumulator, you should be focused on capital gains to generate wealth, so that in retirement you can move your portfolio to more capital stable fixed income assets that will pay you a steady, but flat, income stream to meet your living expenses. Then, should your income be insufficient to cover your lifestyle expenses, sell down assets to meet expenses, so that by the time you die, your retirement assets will have been exhausted.

But that leaves several questions unanswered. What happens if you live longer than your life expectancy, or that once in a life time investment market decline occurs at the wrong time? What happens if there is a medical breakthrough that allows you to live 10, 20 maybe 30 years longer than you expected? How would you survive?

At UGC, we believe the industry has it completely wrong. We believe that cash flow and importantly passive and growing streams of cash flow, is the only way in which you can be sure that you will achieve the outcomes you desire in the future.

Let’s consider what a true investment really is. Do fixed interest investments such as bonds and term deposits give you a pay rise each year for owning them? NO! There is a reason why they call it FIXED interest. Does cash? NO! Does land? NO! Do Commodities? NO! Do currencies? NO! These are not investments. They are many other things, useful things, but they are not investments. They do not generate passive AND growing income streams.

There are only three primary assets which allow true investors to give themselves a pay rise each year, even when they are not working:

• Owning a portfolio of companies (Shares)
• Owning a portfolio of tenanted properties (Real Estate)
• Owning a self-sustaining business (Business Ownership)

But the problem still remains, not all of these asset classes on their own deliver the properties you require. For that you need to do your homework and research and identify the best opportunities to own and how to effectively manage these assets.

At UGC, we aim to get you to where you want to be by partnering with you through both the wealth accumulation and wealth management phases of your life. In close consultation with you, we help you implement prudent and proven investment and financial strategies, many of which are reserved for the domain of the sophisticated or professional investor or the super rich, all with the aim to extract maximum growth in your cash flows and subsequent asset values, to help you achieve financial independence sooner.

If you would like to know how you can take control of your financial circumstances and give you and your family the piece of mind you desire, contact United Global Capital today and speak with one of our financial strategists for a No Cost, No Obligation consultation on 03 8657 7640 or email [email protected].