Renting Shares is a different investing philosophy than the old – school Buy & Hold approach. With the traditional Buy & Hold approach, the only real cash we receive is from dividends. We may have paper profits, but these are not real profits until the stock is sold. And the trouble with this is that these profits can be wiped away in a flash , when there’s a market downturn.
It’s also virtually impossible to consistently pick the right times to buy and sell stocks – at least for the average investor. Investing for dividends is an excellent long term investing strategy, but we can increase the returns from our stocks by up to 10 times by using a Buy & Rent strategy i.e. the Renting Shares strategy.
As you can see, over the year the stock price goes up and down. It starts at 14.75, rises all the way up to 15.90 and then comes back down to 14.20. This represents the classic dilemma for stock investors – if the investor sold at the high, they would have banked a healthy 13% profit in 8 months. But for most people it’s impossible to pick the high.
Now look at what happens if instead of Buy & Hold, we Buy & Rent using the Renting Shares strategy…
By using the Renting Shares strategy we don’t need to pick the highs and lows. We rent our shares to others and we extract small chunks of cash regularly – that all add up to a great profit. In the illustration above we made 22% real cash profit, banked into our account. And that doesn’t count any dividends.
“Old-School Investing like Buy & Hold just doesn’t work anymore.”
This is why so many people get burnt with stocks. One minute their paper profits are great, next they’re gone. And this is why the Buy & Hold strategy doesn’t works anymore. And why Buy & Rent makes so much more sense.
“The key difference with Buy & Rent is that cash is banked throughout the Price Cycle.”