Creating cash ﬂow from your existing assets is the most important step of your plan. In fact it is what every step of your plan strives to do. Cash ﬂow is, quite simply, money in your pocket. It isn’t hypothetical, stuck in some account. It is real money, in your bank account, right now. That is the whole purpose of having investments! Want to retire? If you have enough cash ﬂow you don’t need job income. Want to take more vacations? Pay for it using the money your money makes.
Creating cash ﬂow is the art of always making sure your assets create money, without you ever taking money out of your asset. Cash ﬂow gives you the ability to fund better and better investments, policies and tax strategies. Each time you do that, your wealth increases more. Your cash ﬂow speeds up. You create a faster velocity of money and you accelerate getting to your goal.
Although tax strategy is the second pillar of wealth, or the second step in your plan, really tax strategy is a part of everything. Cash ﬂow is ﬁrst, as it provides an instant beneﬁt to you. Every investment and move you make should be inﬂuenced by tax strategy. If you make a $100,000 investment that returns $7,000 per year, you are making 7%, that is great. If you make the same investment but it helps create $8,000 of tax savings in year 1, you just made 15% on your money. In addition, you can take the $8,000, and buy another investment. That is the power of tax savings, they supercharge your plan. Plus, no one likes paying taxes.
BPSG has strategists that understand taxes (amazing right?) and have access to CPAs that provide tax strategy, no just tax preparation.
Paying oﬀ debt is one of the only guaranteed returns you will ever have. No matter what happens to the market, economy, or anything else if you do not have to make your mortgage payment you get to keep that money. That is guaranteed cash ﬂow and a big boost to your ﬁnancial security. So why isn’t debt reduction the ﬁrst pillar? Because paying oﬀ debt requires cash ﬂow! So, ﬁrst you create as much cash ﬂow as possible from what you have, then you grow that by tackling your debt.
In this phase of your plan, you have already maxed out your current cash ﬂow and are reducing debt. Now it is time to make sure your family and your assets are protected. Having a good life insurance policy is important, but not usually very sexy. Having a life insurance policy that protects your family and creates cash ﬂow though? That starts to get interesting.
The insurance and protection phase, like any other, should be designed with taxes and cash ﬂow in mind. Forming an LLC to protect your assets when you have no cash ﬂow? Not so great. How about forming an LLC at the right time that allows you to save a huge amount on your taxes? That sounds much smarter.
The Blue Paciﬁc Solutions Group now has a relationship with almost every kind of insurance company. We can help you get an incredible life policy, property & casualty insurance, business insurance, etc.
While legacy planning is not always ﬁrst on people’s minds, it is important. What do you want to happen to all your amazing cash ﬂow producing assets when you are gone? Do you want your children to have to pay enormous tax just to inherit what you worked so hard to build? Do you want to make sure a certain amount goes to charity? You now have the power and resources to plan all of that out ahead of time, all while taking our two most important factors into account: Cash ﬂow and taxes.