What is passive index investing?
March 30, 2020
“Passive investing is an investment strategy to maximize returns by minimizing buying and selling. Index investing in one common passive investing strategy whereby investors purchase a representative benchmark, such as the S&P 500 index, and hold it over a long time horizon.
- Passive investing broadly refers to a buy-and-hold portfolio strategy for long-term investment horizons, with minimal trading in the market.
- Index investing is perhaps the most common form of passive investing, whereby investors seek to replicate and hold a broad market index or indices.
- Passive investment is cheaper, less complex, and often produces superior after-tax results over medium to long time horizons than actively managed portfolios.”
Which is an example of passive investing?
“Passive investment includes multiple strategies, with the most common being the investment of pension funds in a mutual fund or ETF. Mutual funds and ETFs similarly hold portfolios of stocks, bonds, precious metals, or other commodities “