Cash Flow . . .

 Cash flow is often a measure of how successful a business is doing.  But to me it is something else.

When I started investing in stocks and bonds I selected those investments based on yield.  Yield is the rate of the dividend for year paid usually quarterly, interest rates that can be pain anywhere from daily to annually and/or capital gains which is the appreciation of the asset that has been sold.  I deliberately selected investments that pay something.  In the case of dividends it was usually at least 3% per year.

And that is my definition of my cash flow, cash flowing into my accounts.  I soon found a host of investments that paid dividends or yields of some sort.  I found life insurance would pay about 4% a year usually on an annual basis.  I have one policy, a Universal Life insurance policy that currently pays me on a monthly basis 4.5%.  My cash value of my regular insurance policies pay me 4% per year.  I usually have that stipend converted to paid up additional insurance thus compounding my return.

In the case of my three New York Life insurance policies I have not paid a dime in premiums in years but let the existing policies take the "dividends" which are essentially a return of capital, to buy more insurance.  Today the cash values exceed the amounts of the original face value of the policies.  I just let them sit there and do their thing and it makes more and more money of time.  I am sure my children will enjoy the largess when I die.

All of my investments pay me something.  I do not have a pure growth stock in my portfolio.  I do have such instruments such as Master Limited Partnerships (aka MLPs). Real Estate Investment Trusts (aka REITs) and some Closed End Funds.   All of them pay something.  In the case of MLPs and REITS must pay out  a large percentage of their annual income, you get to pay the taxes on that but the returns are usually around 6% or greater annually.  Given that a Certificate of Deposit only pays something like less than a half of a percent annually, well that is a great return for your money.

In recent years I have not bought or sold bonds.  The Federal Open Market Committee controls the interest rates and artificially suppressed the yield to less than half of a percent.   So stocks are a much better investment given that their returns are not controlled by the FOMC.  I do have some municipal bond funds and have not done anything with then for years.  I just collect whatever they pay and usually reinvest in stocks that pay much better.

So what does all this mean.  I means that between my IRA and regular brokerage accounts we accrue about $20,000 a year.  About half of that is in the IRA and thus is tax sheltered.  My annual objective is to make my IRA regenerate at least what I have to take out annually.  On average I have done that, some years I don't make back and other years I make back and more, so on balance my IRA has generally stayed the same in value and yet the Government required distribution grows per law.

This year has been spectacular and I believe is being driven by the Dem Congress shenanigans.  We are gonna pay for that later with higher taxes.

Cash flow has been very good to us.