The term “assets” can simply be understood as something that has some commercial value: an asset that can be negotiated between two agents.
It is important to note that any investment will only be active if it generates more income than expense for you
Exactly unlike passive investments, active investments are everything you acquire and generate profits for you, thus making you a source of income and increasing your purchasing power. To put it another way, it is money that will work hard to generate even more money for you.
For example: do you remember the property you purchased and is it a passive investment? What if you rent this property for more than your maintenance costs and installments? Then things change, and the property becomes an active investment, because it does not take more money out of your pocket. On the contrary, it turns into residual income that, regardless of whether you work or not, falls into your account every month.
According to Benjamin Graham in a book of his considered by many to be the best investment book “The Intelligent Investor“.
“A passive investor seeks primarily to avoid errors and serious losses. In addition, he wants to be relieved of the difficulties and concerns associated with the need to make decisions constantly. The main difference between an active investor is that he spends his time and energTweet
Active investors believe that as long as I work hard to read financial reports and analyze stocks, I can beat the market average and make more money. However, active investment is not easy to win in the market. Active investment is more difficult and takes a long time to research.
The objective of active investment is to exceed the average profitability of the market. However, big investors like Warren Buffett or Howard Marks recognize that “winning the market is not easy”.
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Now that you know what active investment is! How about staying ahead and discover what passive investment is
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