Why Cashflow Is The Truest Measurement Of Wealth

Oil tycoon Nelson Bunker Hunt once said, “People who know how much they’re worth generally aren’t worth too much.”

The value of assets fluctuates - almost on a daily basis. And many times the value of said assets is debatable.

So that property that you bought 2 years ago for $50M….a broker’s opinion of value may be $65M today…but on the open market it might only sell for $52M.

As Publilius Syrus wrote in the 1st century BC: "Something is only worth what someone is willing to pay for it".

So instead of solely focusing on net worth, it’s equally as important to focus on cashflow.

Cashflow measures the true value that you can extract from your assets TODAY, in real-time and hopefully on an ongoing and predictable basis. It is difficult to argue or disprove the value of an asset that produces cash flow.

Equity sitting in an asset you hope is worth $50M isn’t going to cover your grandkids’ living expenses. The only way to access that wealth is to sell the asset - unless, however, it’s producing cashflow.

Cashflow is what keeps us alive. It’s what pays for our children’s education, allows us to enjoy a nice meal and travel with our families without having to sell our assets.

So before you speculate an investment with a “high pay off” down the road, remember one thing:

Acquiring assets is smart. But cashflow is king.