Before we go into deciding what strategy we prefer when investing, we must think about whether we want to be a passive or active value investor. “What?” You must be thinking to yourself. What is the difference between the two?
The Short Answer
To keep it simple and short, passive investing is investing by tracking the index you chose. For example, you might be a Malaysian-based investor and you want to be a passive investor. You can simply invest in all the companies within the Kuala Lumpur Composite Index (KLCI) or buy an ETF/ Mutual fund that tracks the performance of the KLCI. In this way, your performance will be similar to whatever the market generates. You will be able to track the market performance without spending much brain power analyzing which stock to buy.
Active investing, on the other hand, is the form of investing where you …