CAPITAL GAINS VS CASH FLOW
There are 2 things that people can invest in. One is capital gains and one is cash flow.
So you buy a land for N10 million and you sell it a year later for N15 million, your profit is called capital gains. You buy a stock for N30 naira and sell it for N50 naira, your profit is called Capital Gains.
So in order to realize capital gains, you must sell something.
Cash flow on the other hand (my personal favorite)
is let us say “you buy a stock that pays you dividend every year. You own the stock, the money is called Cash flow to you. Similarly, let’s say you buy an apartment you put out for rent. The house remains there and you get rental income every month or year, that money is cash flow to you. You can enjoy this cash flow as long as you choose to hold on to the property or stock. While also enjoying value appreciation of the property or stock.
If you later decide to sell it, you would also make capital gains on the same property.
Written by
Mr. Ehikioya Nelson Oseghale
FLG PROPERTY LTD
Founder/CEO/MD.
