You spend your cashflow and I will spend your Capital.



You spend your cashflow and I will spend your Capital.

Posted on February 26, 2006 in Capital, Cashflow, Educational blog, Emotions, Finance, Property, Strategy

Brett Alegre-Wood

I am a great believer that most people can build their portfolio within the confines of their present lifestyle meaning they won’t have to sacrifice their present lifestyle to build a property portfolio. Building a portfolio should enhance your lifestyle never restrict it.

It’s because of this that I adhere to my ‘You spend your Cashflow and I will spend your Capital’ principle.

There are a number of aspects to this principle. Firstly ‘You spend your cashflow or income’ meaning that whatever your present income or lifestyle is I will not impinge upon it. This means that the portfolios growth will come from within your existing and earnt capital and not your income.

The reason this is so important comes down to motivation. If I told you that you needed to divert some of your income into your portfolio two things may happen.

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  1. You would soon lose discipline and redirect the funds back into lifestyle or worse still go back to your old lifestyle using debt from say credit cards.
  2. You would redirect the funds but resent the fact that you cannot maintain your previous lifestyle. This negativity is not going to serve you well at all and will eventually lead to point 1.

The second aspect is ‘I will spend your capital’. This is what I will use to build your portfolio - your existing and earnt capital - that in most cases sits unused in your existing home and portfolio.

Now let me make it very clear. I DO NOT ACTUALLY SPEND YOUR MONEY. You still control and hold it in your bank account.

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It’s not that I actually have any say in what you spend your money on. Obviously I don’t.

I do however need a specific figure that I can work with to build your portfolio. Once I have a set amount of equity for investment I can then work with the various principles and strategies to build your portfolio.

Now within the specific figure or ‘Capital’ I will fund everything including the remortgage on your own home, costs of purchasing the investment properties, a full 2 years cash flow, furniture, void periods, curtains and flooring.

Remember when working with me I make no decisions and take no responsibility. That’s totally up to you. The essential thing about this is that no matter what happens in your portfolio if you have made all the decisions, you will have complete control of your portfolio.

Live with passion,

Brett Wood

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