What Is The Difference Between Active and Passive Investing?
The difference between active and passive investing is like the difference between the actions of one individual vs. the actions of a group as a whole, or you can think of active investing like trying to bet on who will win the Super Bowl, while passive investing would be the ability to profit as all the NFL teams collectively made money on ticket and merchandise sales. Let’s look at an example: statistics tell us that women live longer than men. That’s a fact, and as long as we look at all women, compared to all men, it holds true. But suppose you were trying to pick out just the men who will outlive most women? Would you be willing to bet your money on your ability to choose right? An active investor or active strategy is trying to choose right. Passive Captures the Return of an Entire Market When you take this analogy, and apply it to investing, first you look at the entire market of available stocks. A passive investor wants to own all the stocks, because they think as a whole, ove
