5 Tips to Make Your Investments Work for You
Passive investing has advantages that give it the potential to out-produce an active investing approach -- but only if it's done correctly. Because passive investing epitomizes "buy and hold," choosing the right investments from the start is crucial to generating those high returns.
Passive investing is an investment strategy that seeks to minimize transactions. The idea is to pick out the right investments and hang onto them as long as possible, only replacing them if it becomes clear that the investments are no longer worth holding.
Since passive investors have few transactions, they also have minimal expenses to erode away their returns. Fees, commissions, and capital gains taxes all occur largely as a result of transactions, so if you have no transactions, your costs will be much lower than an active investor's.
Source: Fool.com
