Be lazy and reap the rewards
If it’s too good to be true, it probably is… except when it’s not. Passive investing is one of those areas that sounds too good to be true at first. Who would think that the easier, cheaper form of investing is also the best way to make the most money? But it’s true.
Any time you change investments or move your money around, you pay other people fees, and take a risk that the market won’t work in your favour.
So if we’re talking property, the passive idea is you buy a house as a long-term investment, make sure it has good rental returns, and then keep it maintained.
You save money on real estate agent fees, don’t spend your time guessing if the market is going up or down, and don’t run the risk of selling at exactly the wrong time because your crystal ball got it wrong.
If we’re talking shares, you put money in an index fund that tracks a bunch of different companies, costs very little in fees, and then leave it alone.
Again you’re saving money on other people taking a commission every time you shuffle it around, and avoid being tempted to try to buy low and sell high.
Human beings are emotional creatures, which means our crystal balls are almost always wrong, and we’ll sell at the wrong time.
For property, you can really only be passive in your buying strategy – hence why it becomes known as buy and hold.
Ignoring maintenance or tenant issues is not exactly a quality or long-term approach. But you take reduce costs and create a long-term strategy by buying a good property once, then waiting a few months or years until it’s steady and earning more than it’s costing you in mortgage.
Then instead of selling and hoping for a quick profit, you can use it as an asset to help you buy a second quality property.
We’re taught that working harder should get us better results, so passive investing feels like it shouldn’t work.
But all of the evidence shows that it not only works, you’ll make more money in the long run by doing less.
Embrace the one time that being lazier works out for you.