Passive vs. Active Investing: Which was is for you?

Let’s start out with comparing the two:

Passive investing and active investing are two different approaches to investing that investors can choose from.

Passive investing is a strategy that seeks to match the performance of a particular market or index, such as the S&P 500, rather than trying to outperform it. Passive investors typically invest in a portfolio of diversified index funds or exchange-traded funds (ETFs), which offer exposure to a broad range of stocks, bonds, or other asset classes.

On the other hand, active investing involves actively managing a portfolio of investments with the goal of achieving better returns than the market or a particular benchmark. Active investors make investment decisions based on market trends, economic conditions, and other factors that may influence the performance of individual securities or asset classes.

Passive investing is often associated with lower fees and a more hands-off approach, while active investing is associated with higher fees and a more involved approach. However, both approaches have their advantages and disadvantages, and the choice of which approach to take depends on the individual investor’s financial goals, risk tolerance, and investment philosophy.

For the most part, unless you are a hedge fund manager on Wall Street, passive investing is the way to accumulate wealth. Worrying about day-to-day market swings is a dangerous game and a majority of professional money managers still can’t beat the S&P 500 consistently.