What is passive investing?

Passive investing refers to an investment strategy that aims for long-term growth with minimal buying and selling. This approach is characterized by investing in a diversified portfolio that typically mirrors a market index, such as the S&P 500. The idea is to leave the investments undisturbed for an extended period, thereby reducing transaction costs and taxes that could arise from frequent trading.

By adopting a passive investment strategy, investors seek to achieve returns that are consistent with market averages rather than trying to outperform the market through active trading. This strategy capitalizes on the general upward trend of the market over time and relies on the premise that it's difficult to predict market movements consistently.

In contrast, the other options involve strategies or approaches that emphasize either active management, frequent trading to take advantage of short-term price changes, or investing in specific asset classes, none of which align with the fundamental principles of passive investing.