About

The purpose of the Investing for Cashflow blog is to document and share the results of my attempt to generate paper income. While the content for the site has been in the works for years, it wasn’t until I stumbled upon Pat Flynn’s site (Smart Passive Income) that I was inspired to go online.

You can see my monthly results under the performance tab (or click here). You’ll also find monthly cashflow reports that outline my trading each month. Again, I owe Pat a thank you. He provides his readers with monthly passive income updates, and his format is the one that I use.

Start-Up

The investing for cashflow concept originated from “Rich Dad Poor Dad” by Robert Kiyosaki and his Cashflow 101 board game.

The idea of getting out the rat race and becoming financially “independent” by covering monthly expenses using “unearned” or “paper” income

If I could find the right financial instruments, I could use them as a way to create a paper income stream. After playing with several strategies over several years, I found that consistent returns could be created using a covered call option strategy. The problem? I was spending too much time looking for stocks.

Adjustment

Enter “The 4-Hour Work Week” by Tim Ferris.

I realized that my strategy needed to be “scalable”. In other words, a method that required a fixed amount of time, regardless of how much or little money was generated. The biggest time sink was looking for stocks each month, so if I could find investments that did not require as much analysis each month, I could scale the system.

Turn a “paper” income stream into a “passive” income stream by automating the investing process

Eureka!

The real key for me was making sure that the strategy was consistent. By consistent, I mean that I could generate regular, repeatable payments each month, just like a paycheck. Personally, I think the consistency of a paycheck (both in time and amount) is the reason people fear losing a job.

So I started out with stocks that made the Dividend Aristocrat list, figuring that I wouldn’t mind holding any of these stocks long-term if my covered call strategy didn’t pan out. Unfortunately, a goal of maximizing cashflow created trades that did not work well with the price movements of dividend stocks.

So I began to search for other investments that fit the system and found leveraged ETFs.

Leveraged ETFs are built for day traders, so fundamental analysis is inaccurate at best. And leveraged ETFs are inherently more volatile than non-leveraged ETFs, creating higher option premiums (less money in the market, for the same level of cashflow versus non-leveraged ETFs).

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