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Co-produced with Philip Mause
Part One of this series dealt with bank deposits, brokerage accounts, and insurance company products – which we shall call the “Big Three”. These investments can be viewed as relative “safe harbors”. However, there are all sorts of ways in which investors can experience loss in these three – especially when inflation is considered.
This Part Two will deal with other passive investments – this means investments that generally do not depend on continued work by the investor (those shall be dealt with in Part Three – “Business Opportunities”).
In this Part, we shall examine investments that promise to provide passive cash flow of some sort as opposed to collectibles and other “investments” dependent entirely on the prospect of selling to another buyer (they shall be dealt with in Part Four).
At the outset, it should be noted that there is an almost infinite variety of investments in this category, and there is no way that we can cover them all. Instead, some general principles will be presented, and some typical investments will be examined.
The Five Questions
Because passive investments often look and feel like publicly traded stocks and bonds, investors often approach them using the same tools of analysis and neglect important intermediate steps. In assessing non-publicly traded passive investments, investors must take care to answer four key questions:
- The first question is, “who is the…
