Capital Gains vs Cashflow Income : Which are You Chasing?
April 11th, 2008 by 
Amit
I’m a big fan of Robert Kiyosaki, I’ve read a number of his books and played the board games CashFlow 101 & CashFlow 102 - which I HIGHLY recommend (NOT affiliate links, just in case you’re wondering).
Before I struck it big and become financially independent, my wife and I played the CashFlow games literally dozens of times.
The goal of CashFlow is simple : to build a passive income from real estate deals and business investments that is 1X to 2X your living expenses, at that point you escape the “rat race” and move on to the “fast track” where you can build your business empire and do lots of cool stuff.
It’s an AMAZING game that will really take your thinking to the next level. I can tell you that it really help me back when I had a lot of broke job thinking.
If you’ve played the CashFlow game before you know that the basic strategy to follow is this:
- Do Capital Gains deals, where you can make a whole bunch of money is a short period of time. Flipping real estate or trading stocks is how you do this in CashFlow.
- CashFlow Deals : Once you’ve accumulated some serious cash (I’ll usually shot for about $50k), then I start investing in CashFlow Deals. This is long term stuff that will give you a steady amount of passive income every month. Remember building your passive income is ultimately the goal. You do this by buying businesses and apartment building with the money you’ve made with the capital gains deals.
Here’s what I’m getting at…
I want you to sit back and think about this for a moment, and how this applies to affiliate marketing?
Here’s a smart long term strategy for financial freedom with affiliate marketing :
Capital Gains Deals : Start a bunch of direct linking campaigns and cash in while they’re hot. Hit up season affiliate offers, and new hot CPA offers. You can quickly make a ton of cash using these strategies. (I know from a tax/legal stand point this is NOT actually capital gains income, I’m just making an ANALOGY)
Cashflow Deals : From the money you make with direct linking and short term affiliate offers you can invest that money into : building authority sites, buying existing websites, developing your own product, etc, etc.
If you ask me this is one of the TOP ways of becoming financially free. WAY faster & easier than the traditional route of messing around with real estate and traditional business.
Yuck!
Here’s the problem with how most affiliates do this business…
Most affiliates usually focus strictly on short term offers (capital gains) and have to keep promoting more and more stuff. Ever hear about the super affiliate bragging about making 100 sites before Christmas season starts?
Dude, that’s a BAD job if you ask me - but you will make a lot of money.
The other scenario (much smaller percentage) is the affiliate who tries to make a authority site or who tries to produce their own product right off the bad (not really an affiliate in that case). There’s no doubt this scenario works, however, it will typically take you MUCH longer to get financially free.
It’s also a bigger risk since :
- Your investing a lot of money out of your job income into something that could be a big FLOP. You don’t want to get financially screwed.
- You don’t have the real world experience of launching campaign after campaign and getting your butt kicked by Google as few times. The experience of being an affiliate FIRST gives you a HUGE advantage when you’re moving on to bigger more long term projects.
So in a nutshell :
- If you’re not already, start bringing in some big money with short term affiliate offers
- After you’ve got some cash, start building a SOLID income stream. Trust me, once you have steady income stream your stress levels will go way down and you’ll be MUCH happier - especially if that income stream is several times your living expenses.
Posted in Super Affiliate Mindset | 
Hi Amit,
I recently read Rich Dad, Poor Dad which I thought was excellent and often thought during reading it what he would think about the affiliate business model had it been about when he wrote it.
Half way through his “Cashflow Quadrant” book now, starting to get my head around the whole asset/liability thing. But I think affiliate marketing would be in the Asset column.
“# If you’re not already, start bringing in some big money with short term affiliate offers
# After you’ve got some cash, start building a SOLID income stream.”
This was a good post Amit. This is how I approach online marketing. The short term campaigns, particularly the ones where you direct link and don’t even use a website, are great for bringing in a quick bunch of cash. But the money I make from affiliate marketing definitely goes towards much bigger projects.
Mine is a slight variation of your theme but with a much bigger payoff.
Make money with PPC/Affiliate marketing/SEO etc and use the money and skills to develop defensible web properties that scale big (>10 million uniques/month) and flip it in 2-3 years for 100 Million or something!…
Its really a shame that there is not a single SEO billionaire yet!
There seems to be an overwhelming amount of information to learn about affiliate marketing. I would like to take the fast track here so I decided to buy profitable affiliate websites to get going. If you are interested in selling a few of your profitable turn-key sites please contact me. Thanks.
affiliatejumpstart@hotmail.com
Good post. I agree with each and every word there. I completely agree with the stress levels going down once you have a stable source of income!
Nice post. I always consider Robert Kiyosaki as my mentor, he is the one who give me the right mindset to start up my entrepreneurship journey.
I read most of his books, and my favourite is Rich Dad Poor Dad and Guide To Investing.
He will always be an inspirational figure for me.
Cheow
WOW Amit,
You just SAVED me more time and money…that is one of the TOP
3 advices for the year in 08. I was going to build a long term site but I’m switching over now to make it work for capital gains.
Is there not a lot to be said for series of temporary income though?
Using your example (the christmas season) if those 100 sites were built properly, couldn’t they just be re-activated with similar offers the next year?
It seems to me that if you build up a list of campaigns centered around temporary/season income, and spread them out enough, it could still be quite stable.
Like if I make a site for christmas, mother’s day, father’s day, 420, St. Patrick’s day, and a few more, seems pretty reliable to me. If all the work I have to do is switching the offer around every year, and re-activating the campaign…yeah. I think I’d be fine with that degree if instability.
Thoughts?
It is certainly refreshing to see how you apply your learning from Robert Kiyosaki’s books into your affiliate business. Many can understand the Rich Dad’s book series concept but few can know how to apply them.
Hey Amit,
I have played cashflow 101 before but i have never thought how this could apply to Affiliate Marketing.
Thanks for the nice tips… Capital Gains followed by Cashflow Deals
Check out Amit’s Spoofed Blog
http://www.superrichaffiliatemindset.blogspot.com
Hi Super Rich Affiliate,
AWESOME! Love the spoof blog
Especially the post about the office, I wish I had an office like that! LOL
Sincerely,
Amit
To imitate someone is to pay the person a genuine compliment.
I think I’ll keep to the one monitor for my work space.
Hey Amit, you hit the jackpot on what affiliate marketing is:
Capital Gains Deals : Start a bunch of direct linking campaigns and cash in while they’re hot. Hit up season affiliate offers, and new hot CPA offers. You can quickly make a ton of cash using these strategies. (I know from a tax/legal stand point this is NOT actually capital gains income, I’m just making an ANALOGY)
Cashflow Deals : From the money you make with direct linking and short term affiliate offers you can invest that money into : building authority sites, buying existing websites, developing your own product, etc, etc.
If anyone here is getting slapped by Google is because Google right now wants “Authority sites” or we can call it “real sites”. But note, that building an authority site is not an easy stuff it should take: Time & Hard Work, and a little of luck (I admit that).
Amit:
This is by far, your best post ever!