In the investment world, there are two main ways to grow your money: active investing and passive investing. Active investing is when you choose which stocks or funds to invest in yourself, while passive investing is when you let someone else do it for you. So which one is better? The answer isn’t simple, but here is a walk-through by William Schantz of the pros and cons of each approach.
Active Vs. Passive Investing
There are two basic approaches to investing: passive investing and active investing. The latter involves trying to beat the market by buying and selling stocks in an attempt to profit from short-term price movements. Passive investing, on the other hand, involves simply holding a basket of stocks that track a broad market index.
So, which approach is better? Well, that depends on your goals and preferences as an investor. If you’re looking to generate short-term profits, then active investing may be right for you. However, if you’re more interested in preserving capital and earning consistent returns over the long run, passive investing may be the way to go.
When Should You Go For Active Investing?
Active investing involves taking a more hands-on approach to your investments and trying to beat the market by picking stocks that you believe will outperform the rest. It’s a more risky strategy than passive investing (where you simply invest in a broad index), but it can also offer higher rewards.
One of the main advantages of active investing is that it gives you more control over your portfolio. With passive investing, you’re simply tracking the market, and you have no say in which stocks are included in your portfolio. With active investing, you can choose to invest in the stocks that you believe will perform the best.
Another advantage of active investing is that it can help you to achieve your financial goals more quickly. If you’re looking to generate high returns, then active investing may be the best strategy for you. However, it’s important to remember that there’s also more risk involved.
If you’re thinking about adopting an active investment strategy, then there are a few things that you need to consider first. One of the most important things is your time horizon. Active investing is a more short-term strategy, and it’s not suitable for everyone. If you’re investing for the long term, then passive investing may be a better option.
Another thing to consider is your risk tolerance. Active investing is a more risky strategy than passive investing, and it’s important to make sure that you’re comfortable with the level of risk involved.
Finally, it would be best if you thought about your financial goals. Active investing can help you to achieve your goals more quickly, but it’s important to make sure that you’re realistic about the returns that you can expect to see.
If you’re looking for high returns, says William Schantz of Mid Atlantic Financial, LLC, then active investing may be the best strategy for you. However, it’s important to remember that there’s also more risk involved. Make sure that you’re comfortable with the risks before you commit to an active investment strategy.
When Should You Go For Passive Investing?
The appeal of passive investing is undeniable. After all, who wouldn’t want to earn a steady return on their investment without having to do any work?
However, there are certain situations when passive investing may not be the best choice. Here are three times when you should reconsider going the passive route:
1. When you’re starting out.
If you’re new to investing, you may want to take a more hands-on approach in order to learn the ropes. Once you have a better understanding of how the markets work, you can then move to a more passive strategy.
2. When your goals change.
As your life circumstances change, so too should your investment strategy. For example, if you’re nearing retirement, you may want to shift your portfolio to a more conservative mix of investments in order to preserve your capital.
3. When the markets are volatile.
If the markets are experiencing a lot of volatility, it may be best to take a more active approach in order to protect your assets. Once the markets settle down, you can then move back to a passive strategy.
Of course, this is not an exhaustive list, and there may be other times when passive investing is not the best choice. However, these are three situations when you should at least consider another investment approach, according to William Schantz.
The Concluding Thoughts
There are many different investment strategies that you can adopt, depending on your goals and objectives. Active investing and passive investing are two such strategies, and both of them can be great ways to generate high returns. However, they are not suitable for everyone, and there are certain circumstances in which they may not be the best option. Therefore, William Schantz recommends doing thorough research before putting your money in either an active or passive investment.