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Passive Investment Helps In The Gradual Building Of Wealth

Buying and selling of market investment instruments is the common method by which investors build up the value of their portfolios. This does involve substantial risks and needs an understanding of the market and its behavior. Another form of investing, whose goal is to build wealth gradually is passive investing.

Passive investors do not look to profit from short term price fluctuations or timing the market. They will buy a security add own it for the long term. The assumption in this form of investment is that markets do post positive returns in the long term and that it is not easy to out-think the market and its trends.

A passive investor will build up a portfolio of single stocks, all well diversified. The introduction of index funds has made it easier for this form of investing and has been further simplified with the introduction of exchange traded funds.