Passive Investing
Definition
An investment strategy that seeks to match market returns through index funds rather than trying to beat the market through stock picking or market timing. Research shows passive investing outperforms active management over long periods.
Related Terms
ETF (Exchange-Traded Fund)
A basket of securities that trades on a stock exchange like an individual stock. ETFs typically track an index, sector, or strategy. They offer diversification, low fees, and tax efficiency. Examples: VOO (S&P 500), QQQ (NASDAQ), VTI (Total Market).
Index Fund
A mutual fund or ETF designed to track the performance of a specific market index like the S&P 500. Index funds offer broad diversification, minimal management, and very low fees. Warren Buffett recommends them for most investors.
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