The second I tell people the stock market is my main source of income, I get a story.
Every time.
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It’s always the same one. Someone lost money. The market crashed. It’s basically gambling. Their uncle lost his retirement in 2008.
But here’s what I notice. Every single one of those stories sounds more like a trip to Vegas than a real estate investment.
Nobody calls real estate risky. But people make terrible real estate decisions all the time. They overpay. They skip the inspection. They don’t run the numbers. They get emotional.
That’s not the market being risky. That’s someone not knowing what they’re doing.
Everything is risky when you don’t know what you’re doing. The stock market isn’t special.
Here’s how I actually think about it.
I own 100 shares of a stock. A company I believe in. Solid business, not going anywhere. Most people in that situation just hold it. Watch the price move. Hope for the best.
That’s not what I do.
I treat those 100 shares like a rental property. And I collect rent on them every single month.
Think about how a rental works. You buy a house. Someone pays you to live there. The check shows up whether you do anything or not. You get paid just to own the asset.
Stocks work the same way. Most people just don’t know it.
The strategy is called a covered call. I’m selling another trader the right to buy my shares at a higher price within a set time frame. I pick the price. I pick the time frame. In exchange, I get paid immediately. Cash in my account.
That’s rent.
And honestly, it’s better than actual real estate.
No tenants. No midnight repair calls. No property manager taking 10% off the top. No chasing anyone down for late payments. I’m not on Zillow. I’m not interviewing applicants.
I’m clicking a few buttons.
Now I know the pushback. Stocks move around way more than real estate does.
True. But your rental property moves too. You just don’t have an app showing you the price every 30 seconds. If homes were priced in real time the way stocks are, people would panic just as much.
The volatility isn’t more dangerous. It’s just more visible.
Perception problem. Not a math problem.
And the math is where it gets fun.
I use simple probability to decide how to rent out my shares. If I sell a covered call at a .20 delta, there’s roughly an 80% chance that option expires worthless. I keep the money and do it again next month.
80%.
That’s not a prediction. That’s not a gut feeling. That’s math.
Want more income? Sell at a higher delta. More rent upfront. But now the probability of actually having to sell my shares goes up. I control that tradeoff every single time.
Which brings up the obvious question.
What happens if you do have to sell your property?
I’ll cover that next Tuesday.
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