Buying stocks, bonds and other financial securities with which to receive permanent, long-term investing incomes is now -- to me -- such an obvious thing to do, I still wonder why most people don't do it.
Real Estate Flipping Has Been Popular Since the 1970s
Many years ago, I attended a seminar on how to get rich from real estate. I watched while the teacher showed us slide after slide of houses he'd allegedly bought when in bad shape, then resold after a few months of work cleaning them up.
This was one of the favorite ways real estate gurus from the late 1970s on have advocated to make money from real estate. Find a house for sale that's undervalued because it's in bad (cosmetically bad, not fundamentally bad) condition. Make cosmetic improvements (clean up yard, cut grass, paint walls, put in new carpeting) that are cheap. Then sell it for lots more money than you paid for it.
In the real estate boom of 2000 to 2007, you really didn't have to do all that work, at least in hot markets. You could buy a house today and flip it for a higher amount next month.
Other real estate gurus teach you to slowly build wealth by buying properties that you rent out, use the rent to pay the mortgage, and slowly build equity.
In the crash that followed the real estate bubble, the second group seems much smarter. So long as they can find tenants to pay rent that covers all their expenses, they can ride out this poor real estate market.
Now Web Site Flipping is Popular
In online marketing, some people make a good living by flipping websites. They put up a new website, or buy an existing website and improve it, then sell it for a profit.
On the surface, these two different approaches to making money with "real" real estate and "virtual" real estate seem to parallel the two ways to make money from the stock and bond markets -- selling for a short-term profit and holding for long-term income.
Don't Confuse Real Estate Flipping With Standard Stock Selling
And perhaps that's why so many people fail to buy stocks and bonds for long-term investing income. They have the "flipper" mentality. They want their money now, not in the future.
They think they can always go out and find a "fixer-upper," or conjure a web site from thin air, so they don't need to focus on setting up streams of investing incomes.
However, there's one big problem with that line of thinking.
You Can Always Find Real Estate Bargains
Unless you live in a small town, you can always drive around and find houses for sale that could benefit from a new coat of paint. In normal and booming real estate markets, you can make money from buying, improving and then reselling them.
You Can Always Create Your Own Online Bargains
Websites are even easier, because you can always buy a domain name for under $10, find a web hosting service for under $10 per month, and create a website. Learn a little HTML (not hard), write some content, and you're good to go. Or you can find established sites for sale on Flippa.
There are No Bargains in the Stock Market
However, what too many people still don't realize is that the securities markets do NOT have bargains lying around waiting for you to buy them.
You Can't Paint the Walls of Your Stocks
You can NOT enhance the value of your stock portfolio by working hard at night and on weekends to make basic repairs and paint the walls. You NOT raise the market value of your mutual funds by putting up better graphics or raising its position in Google's search engine.
You have no control over the market price of stocks and bonds. None. Zippo.
You Can't Predict Where the Price Will Go
What's worse, there is NO proven way to even predict whether their prices will go up in the future.
You can find books that explain how to read company balance sheets and what economic markets to look for -- but none of them are proven ways to predict stock market or individual company stock share price increases.
No Stock is Being "Overlooked" Because It's in Poor Condition or in a Bad Neighborhood
You're NOT going to find a fundamentally good company that all other buyers are ignoring because there's a junked car parked in the front yard and the carpets are worn through. Every stock on the market is thoroughly examined by software programs if not human analysts.
You Don't Have the Leverage to Affect the Companies Directly
Unless you're Warren Buffett -- who has sometimes helped companies he owned as a stockholder improve their businesses -- you're NOT in a position to build your retirement's portfolio value through what real estate investors call "sweat equity."
Flipping Real Estate Can Be Profitable - Flipping Stocks is Always a Gamble
Flipping real estate and web sites are somewhat of a gamble, but a calculated one that can be quite profitable for people who know what they're doing.
However, "flipping" stocks, bonds and mutual funds is purely a gamble.
Therefore, buying financial assets for long-term investing incomes is the only way to go -- that makes sense.
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