Understanding Indexing: Passive vs. Active Investment Approaches

Investing in the stock market can be a daunting task, especially for those who are new to the world of finance. One way to navigate this complex landscape is through indexing, which involves tracking a specific market index, such as the S&P 500, to achieve returns similar to the broader market. However, within the realm of indexing, there are two distinct approaches: passive and active. Understanding the differences between these approaches is crucial for investors looking to make informed decisions about their portfolios.