Your Investing Margin for Error | PPhREI Network Roundup | 1-27-2023

by The Darwinian Doctor

In this roundup from the PPhREI Network, read posts about your “investing margin for error,” an ode to cash flow, and take a look back at a bold prediction.

This post may contain affiliate links.

Carpe Diem MD

In this post, Ian Cook boldly predicted that 2022 would be the year for short term rental. He pointed to the growth of the short term rental market and also the unfortunate sunsetting of a popular tax incentive. 2022 was the last year to enjoy 100% bonus depreciation. This is a tax strategy that can be used by full time workers to enjoy massive tax deductions in a similar fashion to real estate professionals. I’m going to weigh in on this prediction in an upcoming full blog post.

In the meantime, read the original post on the Carpe Diem MD blog: 2022 is the year of the Short-Term Rental

The Darwinian Doctor

When I wrote this post, I was trying to deal with the realization that most of my liquid assets were locked in the stock market. I was just starting my real estate empire and was facing a cash crunch. Not because I didn’t have the money, but because all of my financial systems were based around the concept of moving all of my disposable income either into retirement funds or into a taxable brokerage account.

To access these funds, I faced big hurdles of either capital gains taxes or withdrawal penalties. So I wrote up this post about how cash flow generating investments might be superior to stocks.

Read the original post on the Darwinian Doctor blog: You can’t buy avocado toast with VTSAX (Why cash flow is king)

The Prudent Plastic Surgeon

In this article, Jordan Frey writes about the concept of your “Investing Margin for Error.” Basically, this is the wiggle room you have for success or failure, yet still meet your financial goals for your investments. He talks about how his own goals are quite large, and therefore he feels he doesn’t have a very big margin for error.

That’s why he hedges his bets with index funds and invests in unexciting, but reliable real estate like Class B/C duplexes. (“Unexciting” is a relative word, of course. I think his investments are quite exciting!)

I like this concept, and I think it’s important for everyone to consider. If your financial goals are similarly large, perhaps you should be trying to minimize your investing risk as well. After all, the lottery is not a good retirement plan!

Read the original post on the Prudent Plastic Surgeon blog: What is Your Investing Margin for Error?

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