In the day to day, "Main Street" business world, the viewpoint of income investors is common.
How many people do you know who buy a McDonald's franchise -- or even a lemonade stand -- with the intention of selling it in one month, or year, for a higher price? Not many I'm sure. I suspect McDonald's wouldn't even give you a franchise if they knew that was your intention.
Domainers Need to Find Domain Buyers
I was reminded of this recently when I visited a discussion forum for web developers and Internet marketers specialising in creating web sites for mobile devices, using the .mobi top level domain.
You may not have thought about this, but there is a flourishing market for domain names. Some people make a living by buying domain names and then selling them for a profit.
One poster on the discussion forum said that when he bought a domain name, he always developed web sites for it.
Others Buy Internet Domains to Create Income-Producing Websites
That's because, he said, he used to be in real estate, and learned it's better to receive income from a property than to find someone who will pay even more than he did.
So he did not transfer that same business model to Internet marketing. He found it more profitable to buy the domain name and create an actual web site which pays him an ongoing stream of income.
House Flippers Got Burned in the Financial Crisis
In late 2007 we began to see that "flipping" real estate -- buying houses today and reselling them for a higher price tomorrow -- was a much bigger risk than it seemed before the financial crisis.
If you're lucky enough to get in on the ground floor of a real estate boom, you can make a terrific profit. Unfortunately, many such real estate investors pyramid their funds, using the cash from one deal as a downpayment to buy increasingly larger properties -- thinking the boom will last forever.
It never does. When the music stops and everybody runs to sit in the nearest chair, somebody is always left standing. In the financial crisis there were many real estate investors stuck with properties suddenly worth a lot less than their mortgages -- and no prospective buyers within a hundred miles.
Those with rental properties bringing in dependable income were the lucky ones.
Ordinary Investors Get Burned in Bear Markets
Stock market bubbles are similar. Nobody thinks market prices will stop going up -- until they do.
If you'd bought dividend-paying stocks in 1999 their market price is probably about the same as it was then, but at least you've been receiving quarterly dividends. And the dividends have probably grown.
I'm not a real estate investor, but the advice to buy only properties you can rent out for enough money to more than pay for your expenses sounds great to me. At least it will keep you out of foreclosure.
And I receive residual income from my websites.
If I ever bought or started a brick and mortar business, I'd plan to receive regular cash profits from it.
Receiving Cash Cushions You From Market Collapses
And so my retirement portfolio consists only of stocks and bonds that pay me to own them, so I can reinvest that cash.
Income investors don't have absolutely guarantees for the future, but we don't depend on finding new buyers, who may not exist.
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