Why Holding Cashflowing Real Estate Works Well During A Crypto Bear Market
The conversation around which investment is better to hold happens a lot here and on other platforms I create content on. Because I primarily hold Real Estate and Businesses I tend to have a little bit of a bias when it comes to the more traditional equities market or the controversial crypto market, but I want to address the reason to hold a balanced portfolio.
Crypto And Growth Stock Bear Market
By now you've been seeing all over the news and in the markets that there is blood in the streets on the equities and crypto markets. People are panic selling and getting into more "stabile" assets like Cash, gold, silver and value stocks in droves. This movement of the masses out of "high-risk" assets has created a deflationary effect and is driving prices down on the values of some great companies and projects that were overbought.
Even though this needed to happen it is still a shock to many new and experienced investors. That being said, there are investors like myself who have cashflowing assets like businesses and real estate who are looking at this turn of events as a great way to finally buy into the projects we've been looking at and thought were over-bought!
How Do We Buy The Dip When Everyone Is Losing Money
The simple answer is cashflow and cash reserves. In a world focused on capital appreciation, speculation and trading assets. It is easy to forget or miss entirely the most important factor to investing. That is to have cash to invest!
People talk about buying the dip, when they are really buying at the highs, hoping for greater highs! Everyone needs a stream of income to live off of, but few understand or at least take steps to create additional streams of income that allow for larger future investments.
Dollar Cost Averaging Versus Stockpiling During Over-Bought Periods
Dollar cost averaging gets a ton of press and is pushed by financial planners all over the world. This is because it is an effective way to capitalize on gains and minimize losses over the long term of an investors career, but it is only one piece of the equation.
There is a second form of investing that should be considered and that is CASH. Even though I am known for saying cash is trash and it's a terrible investment, doesn't mean that it can be ignored completely. Especially when times are good and cash is easy to come by.
When cash is cheap (like it has been for most of 2021) this is a time to store SOME of the income you are earning into 2 buckets.
Bucket 1 - Dollar cost averaging into the investments you see yourself doing the best in over the long term
Bucket 2 - Stockpiling a cash position in case of a SCREAMING DEAL comes to you.
There is nothing worse than finding yourself in a bear market and having no cash on hand to buy the dip. Well, I guess being over levereaged and getting a margin call or not being able to pay your bills could be worse, but lets assume you didn't end up that bad off. Missing opportunities to double or triple your investment is painful and can be avoided by splitting up your savings for investing into the 2 buckets described above equally.
Passive Cashflowing Real Estate
Real Estate isn't always a passive income stream depending on how you bought, financed and managed it, but there is certainly some PASSIVE income once you hire a property manager and have systemized the business. I've been doing this since 2012 and have my business is 100% automated and only see my properties 1 time per year now.
In fact, because rents are so crazy we were able to do a 30% rent increase since Covid started which has brought our passive income up by about $10k per month! The longer we hold real estate, the better the numbers start to look.
This passive income is recurring and allows us to move into both buckets with our cash. 50% goes into the investments we want to hold for the long term and the other 50% goes and sits in the bank. It's boring money until the day it finally gets deployed. Sometimes our cash reserves sit for months and years building while we seek out greater opportunities. You can't time the markets, but you can have funds sitting on the sidelines to buy the dips if you leverage this "2 buckets for saving "model for handling cash!
Join My Mission To Build 100 Millionaires!
As many of you know, I built my wealth through Real Estate and only now learning more about cryptocurrencies. I've found Leofinance to be a great place to share my insights and although I don't claim to be an expert in Crypto, I am considered a leading expert in small multi-family investing.
Each week I share my hard-earned insights on wealth building with anyone who will listen! I call this journey through the 52 wealth principles "The 52 Weeks To Wealth".
To join my mission and get access to my book for FREE at ibuildmillionaires.com
Thank You To This Community!
I provide these insights as a way to give back and help others who find themselves on the same journey I was when I got started. I want to say thank you to the Leofinance community for giving me the opportunity to learn more about Crypto as well as to the creators and team for providing many great avenues for investors to grow their wealth and knowledge in one easy place.
Cheers to our success! @GualterAmarelo
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