Promissory Note Investing for Cash-Flow

Investors and Retirees Love and Need Cash-Flow Income

An Investing Foundation

One of the cornerstones of sound investing or retirement investing is – you guessed it – interest income cash-flow. Because, one thing is for certain: our living costs-food, clothing, housing, medical, and transportation are “dependable, predictable and recurring” expenses-cash-flow out; they require weekly, monthly and yearly cash payments. Cash-flow income is always welcome, but it is especially vital just to maintain a comfortable lifestyle. A person can be “asset rich and cash poor”. We have many more Investing Help Articles Now Available.

Examples of Cash Producing Assets

Dividends, rent, capital gains, and interest provide cash income. Each of these investing categories require specific time, skills, and experience. Each of these categories has positive and negative features. Promissory notes are my preference, the type of investment I have benefited the most from over the past many years, and my recommendation to conservative investors. I’m happy to invest, and reinvest, my interest income, and retirement income in selected notes.

4 Reasons to Invest In Promissory Notes

Interest income is less volatile than stock prices and stock dividends.

Remember the recent stock market and financial market crisis of 2008-2010. Stock prices plunged about 50 per cent from peak to trough. Some stock dividends were reduced or eliminated. Interest income from most promissory notes fluctuated little and did not collapse; it was more stable and predictable than stock prices and stock dividends.

Rather than obsessing about day-to-day stock market fluctuations, I prefer to track my interest income, which can grow steadily, as I reinvest current income and new cash to my accounts. Over the long-run, by focusing on generating cash flow interest income, my fears are soothed.

Interest income can be adjusted periodically to protect from inflation

Inflation may not pose much of a threat now, but in five or 10 or 20 years, who knows? If you buy a long-term, fixed-rate bond or long-term, fixed-rate certificate of deposit, the income it generates does not adjust. But because you can invest in adjustable rate notes, or short-term notes, you can adjust your investing decisions to compensate for inflation.

Cash-flow income helps to preserve your capital

Most investors avoid depleting their capital before retirement, and avoid it as much as possible after retirement. Nobody wants to outlive his or her money. The beauty of cash-flow income is it keeps giving: As long as you don’t sell your promissory notes or deplete their capital, you can spend your interest income every year knowing you won’t outlive your nest egg. In an emergency, selling part of your portfolio is still an option.

Promissory Notes Secured by Real Estate is Secure

One important secret to successful investing is not to lose money. It can take years to recover from a bad investment. If your promissory note nest-egg is backed-up by a mortgage on well located real estate it is a safe, long-term cash-flowing investment. Sacrificing yield for added safety is usually a good trade-off. I would rather sleep soundly and comfortably with a safe yield then to reach for the highest yield and its accompanying risks, and toss and turn all night.

Closing thoughts

No investment is risk free. No investment is perfect. No investment is right for every investor. The key to successful investing is to understand yourself— your hopes and fears, your available time, and your experience and training.

Understanding those factors will allow you select an investment that “fits”

To help find the right investment and to handle it properly, an experienced guide can be valuable.

We all have to start at the beginning. But we don’t have to start alone and without guidelines.

Promissory note investing may be a good fit for you. Check it out. Ask questions. Gather information. It has worked well for me over the years, and for many, many, serious, careful investors. We have many more Investing Help Articles Now Available.