Active and Passive Strategies

The two main methods of investing are called active and passive management.

Active investing is what most people mean when they talk about stock investing or FX Trading. Whether they do it, their broker does it, or a mutual fund manager does it, the money is managed “actively.” The hardest part about making the case for passive investing is convincing people that active investing may not always be all that it is cracked up to be. According to Lipper Analytical Services, over the five years ended in June 1998, 90% of “general equity” mutual funds, meaning garden variety stock funds, under performed the Standard and Poor’s 500 Index – the major benchmark for stock mutual funds. And 90% of all new FOREX traders that tried to manually trade an FX account themselves, lost all their money in less than 3 months.

With 9 out of 10 equity mutual funds failing to beat the market average over five years, you can understand why some people want an alternative to “active” management. Many people who just want a return equal to that of a major stock index use passive investing as a way to do this. In other words, find the experts to trade for them, or investments that require very little participation.

The Golden Goose will educate you on these options and find solutions that best fit your needs, level of risk and time constraints.