How to Make Money Without Doing Anything

Passive investing is a way to handle a lot of market activity. It is also a way to capitalize on market growth over the years. There are many ways to do this whether you have your own money market account or if you have a financial advisor there to assist you every step of the way. There are numerous ways to invest and find the returns you are looking for, but if you are looking for long term growth and investment than the passive investment is something you should learn more about.

What is Passive Investing?

Also known as “buy and hold” philosophy, passive investing is buying stocks with a long-term focus. It is hoping for steady growth as the market increases. It assumes that investors will appreciate with time it is monitored and adjusted over time, but left to grow on its own.

Portfolios like this contain different investment types mostly made up of mutual funds or exchange-traded funds and index funds. They do not hold as many stocks or bonds individually but seek to hold handfuls of diversified accounts to balance the portfolios.

• Mutual Funds: This invests in the company that buys and sells stocks and bonds in your name. It is a combination of managed stocks with diversification.

• Exchange-Traded Funds: This follows collections of stocks or the index itself and is good for tracking the market itself and its performance.

• Index Funds: Similar to EFTs and index fund is more cost effective and are easier to add to portfolios with less of a financial impact such as fidelity and vanguard being the most popular index funds available.

The Good and Bad of Passive Investing

There is no right way to invest in the market. Every strategy has benefits and detriments and for those who tend to avoid the risks associated with their monetary investment passive investment provides a way to be invested and just follow the market which usually does grow over time reducing the likelihood of losing your initial investment completely.

 Another benefit of a passive investment portfolio is that there are few fees associated with it because there is infrequent buying or selling of securities. You also lose less money to the placement of executed actions.

Passive investment accounts hold few individual stocks they are most often made up of EFTs, mutual funds, and index funds. They are also heavily diversified to cover whichever side of the market is moving at the time. If securities are bought individually, you are the ones choosing the stocks you want to buy and you can reap the benefits of a diversified account.

Passive investing is not the best strategy for those that want complete control over their portfolios. Often, passive portfolios are controlled by fund managers meaning they make most of the adjustments over time and you are more of an observer. This is fine for some people, but others don’t like to think they have no control over their own money and investments.

Of course, to become more than a passive investor you need more knowledge about the investment strategy and have a better understanding of the market. Passive investing often has less of a return than other types of accounts though they often whether downturns in the economy takes.

Active Management

Active investors enjoying taking a part in the market as it moves and wants to watch their funds move around, preferably up. Passive investors ride the market for years at a time without touching their accounts much. If you are trying to learn more about investing you will need to figure out your own preferences and what you are and are not willing to risk for shorter or long term gain. It is ultimately up to you what you do with your own portfolio.

It ultimately breaks down to the amount of risk you are willing to assume and how much you can stand your hard earned money disappearing in a volatile market. If you are averse to risk and to tempting fate and a loss that passive investing is perfect for you. It is a lot safer and if you are starting with ETFs, Index funds and mutual funds than you will definitely see your funds grow over time unless something extreme happens as a passive portfolio is balanced to withstand the movements of the market.

What you want from the future and what your investment goals are intertwined which will ultimately lead you in the direction you want for your investing such as someone who wants to buy a home in a couple of years or another who wants to build a retirement. The investments that are made should reflect what they want out of that investment. A future homeowner may use their own capital to hopefully generate a bit more quickly so that they can put that down that first payment so they will take the riskier options whereas saving for retirement is more of a passive activity because it is a long way off and they have the time to build a strong portfolio that will set them up later in life for a stable retirement.

It is also a matter of fees and charges. If you want an account actively-managed, then you will need to invest some of that money into picking the right brokerage and people to handle it. You will also encounter more fee from frequent trading and transactional actions taken. If you are a passive investor you will have fewer fees and your costs will stay lower, but it will not necessarily grow as fast as it can under an actively managed one.

Final Thoughts

Passive investing is a long-term approach to some financial objectives. It is perfect for retirement accounts that are managed for you or if you are waiting for children to come of age so you can use it to fund their educations, then this is the better options for you.

Before investing in the market you should read up on investing strategies and research the companies and securities you are looking to put your money into. It’s up to you to do the homework.