What Is Passive Investing? Meaning & Example
Definition
Passive investing aims to match market returns by holding broad, low-cost funds rather than picking individual winners. It involves little trading and low fees.
Related terms
An index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
ETF (Exchange-Traded Fund)An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
Expense RatioThe expense ratio is the annual fee a fund charges, shown as a percentage of the money invested. Lower expense ratios leave more of the returns for investors.
What is Passive Investing?
Passive investing aims to match market returns by holding broad, low-cost funds rather than picking individual winners. It involves little trading and low fees.
Can you give an example of Passive Investing?
Holding a total market index fund for decades and rarely trading is passive investing.