Capital Gains occurs when an asset increases in value. What is an asset? Any object that increases in value over time. You can buy a home, and that asset will be worth more in five years. It doesn’t need to be something expensive either. As long as it increases in value, you have yourself an asset. Some people collect sports trading cards. The value of these cards depends on the quantity available, condition, and the success of that particular player, just as the home’s value depends on the same, with players’ success replaced by the neighborhood’s overall success.
You can also buy stock in its early stages. In a couple of years, your investment is now worth ten times more. That is the beauty of the capital gains passive stream of income. You benefit from a decision you made over and over again. This option is a way better trade-off than the “what have you done for me lately?” stance of a traditional job or entrepreneurial venture. We all need to embrace this income stream on any level we can afford. This stream has unlimited potential. Developing a skill of spotting future value in something will assure you a life of financial comfort.
I’m by no means saying spotting a diamond in the rough is an easy skill. If it was everyone would have “the eye” and the gains made would be slimmer. I’m saying that being aware the skill exists and being average puts you ahead of the people who know nothing of it. It means giving yourself the chance of escaping the monotony of waking up Monday-Friday giving your time and effort for a job you despise. Capital Gains can be a way out.
Find three areas that interest you. It doesn’t matter what it is as long as you can obtain something that will increase in value as time passes. Everyone is not interested in real estate. The stock market can feel like a casino to most. Pick something you are comfortable with investing in. Finding “your area” is not a popularity contest. This choice is for you. If you find future value in shot glasses and microphones, do it.
This stream can seem like a shot in the dark. Let’s get into the most common methods to benefit from capital gains. Buying a home is the most common. It may be the safest investment you can make in terms of capital gains. With being the safest, the capital gains are slower. Slower, barring a community-wide facelift after you’ve made your purchase. The increase may be because of new schools, a sports arena, mass transit extensions, or shopping areas. It can happen and will accelerate your gains but remember purchasing a home is a long-term investment.
An additional perk of your home increasing in value is the ability to use the equity (Value of the home minus Amount Owed on your home) for whatever you see fit. The best use of the equity in a home is to consolidate debt at a lower interest rate, make home improvements to increase the homes’ value, or utilize the funds to invest and make more money. The options are limitless but be responsible. The use of equity is debt until you make money from your venture of choice. Be responsible.
In closing, Capital Gains is a fast forward button in the pursuit of financial freedom. If this was not on your radar, it needs to be as soon as possible. This stream is passive and will be a continuous pat on your back to remind you of just how great a decision you made in the past. For most of us, the pat on our backs will be a welcomed yin to the yang of the bad decisions we’ve made.
Life is what you make it. Make it easier on yourself and work on finding future value and investing in it. No money? You can start by looking in the mirror and pulling all the potential you see out of the person in the reflection. There is lots of future value there.
Food for thought…You do the dishes.
