If you have money to invest and you’d like to see it grow, there are several investment strategies you can use, including a passive investing strategy. This strategy involves putting money into an investment vehicle, such as buying a stock, and holding it over many years (as opposed to constantly buying and selling your investments).
Generally, markets rise over time, and this strategy takes advantage of that steady growth. The goal is to match or slightly exceed market returns in the long haul, not necessarily beat the market. (Retired? Here are some of the 8 best investments for retirees.)
Index funds, mutual funds, and exchange-traded funds are three of the most used passive investment vehicles. Each tries to mirror a particular index, such as the S&P 500 or the Dow Jones Industrial Average.
Passive investment is not for everybody. If you like to be more involved in managing your portfolio and pick individual holdings, a more active investing strategy might be a better approach. Passive investment offers less risk and more diversification, and you are unlikely to score big with this strategy.
24/7 Wall St. created this list about the passive investment strategy based on a report produced by financial technology company SmartAsset, entitled How a Passive Investing Strategy Works.
The list can be the first step in deciding whether passive investing is for you. If you are unsure, talk to a financial advisor. She or he can clarify your goals and risk tolerance and steer you to the correct investment strategy for you. (Here are 20 best ways to invest $100K.)
Click here to see how to gradually build wealth using passive investing.
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