Passive Investing:
This strategy involves investing in a balanced portfolio of ETFs that cover various assets, markets, or sectors—without picking individual companies. The portfolio performance matches the market index, reducing risk and requiring less monitoring. It’s ideal for long-term investors.
One popular index is the S&P 500, which tracks the performance of the largest 500 companies in the U.S.—one of the biggest financial markets globally.
Fun Fact: The father of passive investing is John Bogle, founder of Vanguard, the world’s largest investment management company.
Active Investing:
This strategy involves hands-on decisions by a fund manager or investment team to try and outperform the market. It includes ongoing analysis, market tracking, and selecting investments based on future performance expectations.