Comments

  1. I am definitely a passive investor. Originally not by choice, but because I didnt know enough about investing to be an active investor. But now that I have read your post and understand the difference, I will remain a passive investor beacuse of the things you shared and because it has always worked well for me. Thanks for the great post! I will be checking back often!

    • There is a lot to be said for passive investing. The results are good and the time commitment is minimal.

  2. I am also a passive investor. If professional active guys underperform the vast majority of the time, I see no reasonable way I can do better. In actuality, passive, index investing will outperform the majority of the active guys every year. I’ll take that

    • That’s the funny thing. Active managers rarely beat the market on a consistent basis, yet so many people still invest in those funds. My guess is because most investors simply look at the return of the fund in question and not the index, or just read an article about a ‘hot’ stock and buy in because it is ‘hot’.

  3. I learned this the hard way. I was with an advisor who preached active management, and in a 2 year period, I didn’t really see any benefits. I have since changed advisors and the passive approach seems to be a better long term strategy.

    • When I first began investing, I bought into the active management style myself. I think most of us do since it’s so glamorous to think we can earn a higher return. Sadly, it rarely turns out that way.

  4. I figure the only people getting rich on “active investing” are those who get paid when you trade. Far easier on the blood pressure to buy well and hold long term.

    Good common sense advice though.

    • Investing for the long-term is easiest when you ignore the media with their hype regarding the market over the short-term. Prepare a plan that will help you meet your goals and stick to it!

  5. Who needs sexy!?!? I’ll take the returns… I once ran the numbers and if it takes you 4 hours per week to beat the market by 2% (not easily accomplished) on a 50,000 portfolio then you’re making less than $5 per hour for your time (before taxes!).

    I’ll take passive investing for the vast majority of my $$. I have a few bucks that I play with but just a few and money I’m fully prepared to lose.

    • My time is worth much more than $5!

      I too have an account with play money. I still don’t devote much time to it and am OK with losing all of it. Luckily though that hasn’t happened yet!

  6. I like passive investing because active management can’t beat passive consistently anyway. Most of my mutual funds and ETFs are passive index. My dividend portfolio are comprised of individual stocks and I’m mostly inactive there as well.

  7. I keep my active investing for my small business endeavors I work on, not the stock market.

    I’ve been a passive investor but I’ve been trying to get a more concrete understanding of why you want a bond/stock ETF mix if you’re not touching the account for decades. Most research just comes up with “it helps stabilize your investments” but isn’t that only relevant if you’re touching the money within the next 10 years? I’ve also heard an idea about when you re-balance the mix you are essentially buying low and sell high over time.
    Any Thoughts?

  8. I always like to do a little bit of both (active vs passive). Keep the index funds in the ROTH IRA/401k and have some dividend stocks in the taxable brokerage. I’d agree that the way to go for the absolute long term is finding the lowest expense ratio funds you could find and ‘set-it and forget’.
    Rich

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