Passive investing is becoming quite popular these days. Investors are pulling their money from actively managed funds and putting it in passively managed funds – like index funds or exchange traded funds. For one thing, it costs less. However, financial advisors warn that investors should keep active funds in mind as well, and a combination of both is the best investment strategy.
Key Takeaways:
- If one wants to be successful with passive investing they must have an active strategy
- A good passive portfolio will likely consist of a mix of ETFs and or index funds that provide exposure to equities and fixed income
- Financial advisors say to diversify and be sure not to chase returns. Doing so will lead to buying high and possibly selling low which diminishes profits
“Passive investing has been steadily gaining steam over time as investors pull their money from actively managed funds and instead pour it into lower-cost passively managed options, such as index funds and exchange-traded funds.”
http://www.cnbc.com/2016/11/18/successful-passive-investing-can-take-active-strategy.html
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