Active or passive investing is one way to look at the way you put your money aside. If you are looking at land for sale, you might want to think about whether you can fit it into your property investment plan. A combination of active and passive investing might be your best bet. Here is how it would work.
Passive Investing
In passive investing, you invest your money across all the stocks of an index such as the S & P 500. You gain as the overall market gains, or lose as it loses. The theory is that the market will come out winning in the long run. This is a safe investment unless times get too hard when you need the money.
Passive investment does not revolve around individual decisions. For example, you would not buy land for sale and add it to your investment portfolio if you were doing strictly passive investing. You would not make that kind of decision. Consequently, your gains would be limited to the same kinds of gains that most other people are getting, even if those are only mediocre.
Yet, passive investing can form the basis for a dual-pronged approach. You can place part of your investment money in a managed index fund and actively invest the rest. This gives you a steady base with the potential for excellent profits.
Active Investing
When you invest actively, you choose what stocks or investments to purchase and sell, and when to make the transactions. This means that if you see that land for sale, you can invest in it yourself, in your own time. You can also sell it when the timing seems right to you and make all the profit you can. The potential for a particular investment in active investing is much higher than it would be for an overall index of passive investing.
Of course, active investing assumes that you have enough intelligence to make sound decisions. One good decision is buying land for sale that will turn a profit after you hold it for awhile or improve it. In a passive investing mode, you would leave land buying up to the companies on the index. In active investing, you can do it yourself. When you add active investing to your investment plan, you take control and make the individual decisions you want to make.
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