The ‘What for?’ of Portfolio Design

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It’s not about the money.

Rather, it’s about what the money can afford us, in our lives and in our communities. And of all the things money can afford us, perhaps our time is the most precious. Once we’ve spent it, not one breath of our lives can be bought back for all the money in the world.

So. Why build a real estate portfolio? Given how precious our time is, we can answer this question with another question:

If you did not have to trade your time for money,
if you knew that your family’s present and future needs were taken care of,
and if there were no other constraints on how you used your day,
where would you want to focus your time and attention?

A well-designed asset puts money in your pocket. It pays you regularly whether you are at home, at work, or on vacation. In the short term, you do the work of building the asset base. Over the long term, you can harvest the asset’s cashflow to enable your deeper passions and pursuits. We may love our work, but with a solid asset base, we don’t have to work. Consider how your next year might look different if getting paid was a non-factor in how you choose to spend your time.

Now, let’s say you build an investment portfolio that generates enough passive revenue to comfortably meet the needs of your family. Imagine the portfolio is indexed with inflation and hedged against a broad range of risks. And you have also built in a number of exit options that could provide strong equity gains in the mid- to long-term that flow gracefully into your retirement plan. Now what?

Do you open an orphanage? Do you go into politics? Sail around the world? Coach your kid’s soccer team? Write a book? Go back to university and get that degree in theoretical physics? Become a scratch golfer? Learn to paint? Launch a community-owned renewable energy utility? Or start a movement for social transformation?

Where would you invest your time?

  • more time with family
  • more involvement in your community
  • leadership or mentorship roles in areas of expertise
  • travel and discover the wonders of the world
  • creative pursuits – art, music, performance, etc.
  • time with close friends
  • learn a new subject
  • volunteering & community service
  • run for mayor
  • finally finish that masters degree
  • write a book and go on a speaking tour
  • become a coach or mentor
  • exercise more regularly
  • cook meals and invite friends for dinner
  • take a contemplative sabbatical
  • just sit and breathe for awhile and take in the rich mysteries of life

This is the ‘Why?’ A well-designed investment portfolio is tailored to enable a specific vision rather than simply chasing dollars for the sake of dollars. If we know what we want, the rest becomes much clearer. The questions that follow also become more obvious, such as:

  1. What do I want to create in my lifetime? What endeavours are worth my time?
  2. How much passive income do I need to meet my basic needs while pursuing these interests?
  3. In order to generate that cashflow, how many assets do I need to own?
  4. How can I design my portfolio to mitigate risk and sustain that cashflow reliably over the long term?
  5. Who are the partners I want to be collaborating with to accelerate this journey?

This is our premise. If we buy smart and manage our properties with diligence, real estate can free our time for its highest and best use, whatever we decide that may be. With such a portfolio, things can become possible in our lives that previously would have seemed entirely out of reach.

 

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