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10 Basic Investing Principles - Principal 8 - Active vs Passive

10 Basic Investing Principles - Principal 8 - Active vs Passive

| April 26, 2023

Topic 8: Active vs Passive Investing 

Active investing and passive investing are two different investment strategies that can be used to manage your portfolio.

Active investing involves actively buying and selling stocks, bonds, and other investments in an attempt to beat the market and generate higher returns. Active investors typically conduct extensive research and analysis to identify undervalued securities and make investment decisions based on their analysis.

Passive investing, on the other hand, involves investing in index funds or ETFs that track a specific market index, such as the S&P 500. Passive investors do not try to beat the market, but instead aim to match the performance of the market by investing in a diversified portfolio of securities.

There are pros and cons to both active and passive investing. Active investing can potentially generate higher returns than passive investing, but it also carries higher fees and expenses and requires more time and effort to manage. Passive investing, on the other hand, is generally less expensive and requires less time and effort, but it may also generate lower returns than active investing.

Ultimately, the choice between active and passive investing depends on your investment goals, risk tolerance, and personal preferences. Working with a financial advisor can help you determine which strategy is right for you and develop an investment plan that aligns with your financial goals.