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What is better Active Investing or Passive Investing?

Which is better; active investing or passive investing? To truly determine the answer to that question we would need to dive deeper into the what the definition of active investing is and what the definition of passive investing is.

Active and passive investing are relevant terms to whatever asset class you choose to invest in whether stocks, businesses, precious metals, real estate and other investment asset classes. We will focus on real estate as the asset class of choice.

What does active investing mean? active investing definition

Active investing means what you probably think it does from a face value read of the word. You are taking an active role in your investing. This “hands- on” approach to investing is used when you are responsible for the success and failure of the investment based on your actions.

In active investing you (and any of your other active co-investors) are putting your, time, energy and resources into making sure that your investments and investment strategies provide returns that can out-pace inflation.

What is an example of active investing?

Imagine it has been a long week at work and you finally have some time off to spend with the family on a Friday night. You are sitting down to dinner at 8 PM when you get a cellphone call from your one of your tenants. When you pick up the phone you are greeted by the timely news that the boiler broke, there is no heat and hot water and it is the middle of winter.