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Too often these important facts are overlooked whether people are pursuing good health, exercise, work/play, or wealth creation.
Consider the investor who concentrates on growth stocks because he knows the historical rate of return over a time period is quite high.
So what happens in the middle of this strategy when he has plowed all of his money in this asset class and the market deteriorates.
The market fluctuation is natural.
The problem will be that the investor has overlooked his other streams of income.
An economic downturn often results in a market plunge, and this may be the moment cash flow is crucial.
Often the hapless investor will need to do that which is the most harmful to an investment plan-sell at the bottom of the market.
Balanced cash flow strategies can ensure you will never need to pursue this foolish path.
The purchase of stock has proven to be a wise choice over the long term and keeping in mind the need to buy low and sell high.
If you plan unemotionally, you can develop cash flow strategies that will provide a stream of income regardless of the highs and lows of the market.
Implementation of covered calls or "share renting" on the stock portfolio you own will allow for the premium income.
If the market increases and your price per share reaches the strike price, you will get your investment back after having received the premium income over the length of time you have held the stock with the covered call.
If the market crashes, the stream of income will continue.
Cash flow strategies of this type will give you the funds that may keep you from selling low out of necessity.
And, more importantly, this income during a downturn can provide additional funds that will allow you to purchase stocks at the lowest point in the market.
Additional cash flow strategies of this type should be built upon by selling covered calls on the new, low-priced stock that has been purchased.
Financial independence rarely is a matter of luck.
But with a solid education and a well thought out plan, you can build your asset base and develop vibrant cash flow strategies that will provide the balance that often is the key to success.
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