Avoid Being a PERMANENT Investor. Here's How ...
Buy and hold, buy and hold, buy and hold, but … for how LONG? Do you EVER sell? Well, first, you can check this previous article I wrote on 7 strategies for when you might consider selling an investment.
But the whole goal of investing is to be able to retire. And youuu … can’t really retire if you never sell anything, right? Well, outside of the 4% rule, there are several strategies you can use to live that retired life WITHOUT being forced to sell.
BUY, BORROW, DIE
💀 Sounds scary, but it’s actually one of the ways super wealthy people avoid paying taxes in retirement. They simply borrow against their stock portfolio. And no, you can’t do this is your portfolio is only $10,000 in meme stocks.
It’s actually called collateralized lending and you can watch a video on it here.
Some brokerages call it other things, like Schwab, for example, who calls it a Pledged Asset Line.
If you want to open a Schwab account, you can do it here.
DRIP
💎 Dividend Reinvestment Plan. If you own dividend stocks, you should 100% consider reinvesting your dividends to buy more shares. It’s compounding. Say you’re in your 20s and maybe 20% of your portfolio is in dividend stocks. As you get older, you’ll invest more and more into dividend stocks.
They’ll compound over time, but at a certain point, like, once you’re retired, you might decide to go in and turn DRIP off (at least maybe for some companies). Those dividends no longer get reinvested. Instead, you get 💰 deposited into your account. Cash you can live off of.
COVERED CALLS
📞 Covered calls are a great strategy to generate income. If you don’t know anything about covered calls, this playlist on TikTok explains everything you need to know. And yes, it’s also on YouTube.
Say you own a stock after 20-30 years of investing in it consistently over time. Maybe they’ve issued a stock split or two. Now you’re sitting on 3000 shares! Each covered call contract represents 100 shares. Some of these covered calls can be super lucrative.
Option 1: You decide to sell a few hundred shares to live off of for a few years. Why not sell covered calls on those shares to generate some income? If the shares get called away, well … who cares? You were gonna sell ‘em anyway. And if they don’t get called away? Keep selling covered calls till they do and live off that income!
TRIM
✂️ Finally, you might just find that over the years, you’ve prioritized ONE company over all the others and now you’re “overweight” that company. It might be 30-40% of your portfolio, which could be incredibly risky. You could again consider selling covered calls to generate income and then use that profit to live off of or reinvest into safer things like dividends, bonds, CDs, or just cash to live off of.
There you have it. Now you’re not a permanent investor.
