Reduce Obligations to Increase Freedom
Flexibility, Agency & Optionality
“Make ‘passive’ an option, not an obligation.”
-Aaron David
We help you ask yourself the right questions to maintain maximum optionality when it comes to your investments, limiting your downside risk and greatly increasing upside potential.
Some investments are more passive and some are more active. “Passive” sounds really good, and it definitely can be. But it’s often a requirement in many “off-the-shelf” investment products rather than an option.
For example, if the stock market were to crash, people might tell you that it “went on sale.” Now you can buy low in order to sell high later. Do you buy?
If you decide to buy, you’re now in a situation where you must passively wait for the discounted stock to increase in value. Could you actually do anything to add value and increase a stock price after buying it at a discount? No.
In this case, “passive” is another way of saying “completely out of your control.” The only options you have in this situation are to
- keep waiting or
- stop waiting and sell.
Now let’s look at a different situation. A situation where we maintain more optionality. If we bought an old house “on sale” while the market was down, couldn’t we actively do things to increase its value?
- rent it out
- repair, update, restore, renovate, remodel it
- advertise & remarket it
- landscape it
- hire property management
- change property management
- manage it ourself
- raise rents
- lower rents
- place tenants in vacant units
- get rid of problem tenants
- change access to the property
- subdivide and sell part
- subdivide and sell it all
- demolish the structure and build a bigger one
- refinance
- pay it off
- start an elder care facility
- sell with owner financing
- do vacation rentals
- smoke the “hope-ium,”, cross our fingers, and pray that market conditions cooperate and cause the asset to appreciate by itself with no involvement from us, etc.
We got options, baby! Options! Even if the value fell further still, we could still be making regular profits by renting the property!