How to Start Passive Investing and Let Your Portfolio Grow with Less Effort

What Is Passive Investing?

Passive investing is an investment strategy focused on generating returns that closely mirror overall market movements, rather than trying to outperform the market by picking individual stocks or timing trades like in active investing.

This approach is commonly executed through tools such as index funds or ETFs, which are designed to track a benchmark index—like the S&P 500 or MSCI World. In other words, if the index goes up by 5%, these funds aim to deliver a similar return. This strategy reduces the need for active portfolio management and is ideal for investors seeking long-term growth without having to monitor the market daily.

How Is It Different from Active Investing?

Passive investing focuses on tracking an index without the need to pick individual stocks or trade frequently. Investors simply hold a portfolio that mirrors the weightings of an index like the S&P 500 or MSCI World, allowing their investments to grow alongside the market over time. This approach typically results in lower costs, lower fees, and less day-to-day decision-making stress.

In contrast, active investing involves trying to outperform the market through research, stock selection, and market timing. Active investors believe that with the right strategies, they can earn higher returns than the broader market. However, this approach often comes with higher fees, increased trading activity, and greater exposure to volatility. ¹

Why Has This Strategy Gained Popularity?

Over the long term, many investors have found that passive funds often outperform actively managed funds—especially after accounting for fees. In addition, passive funds tend to have lower volatility during certain market periods. These advantages have made passive investing increasingly popular among investors around the world who seek steady growth without the complexity and cost of active management.

Advantages of Passive Investing for Long-Term Investors

• Lower Fees

Passive funds typically have lower total expense ratios (TER) compared to actively managed funds, since they don’t require fund managers to constantly rebalance the portfolio.

• No Need to Watch the Market Daily

You don’t have to follow economic news or time the market. Your portfolio is designed to grow steadily over the long term without constant oversight.

• Ideal for Full-Time Workers

If you have a full-time job and limited time to study the markets or monitor your portfolio, passive investing allows you to stay invested consistently without daily involvement.

• Reduces Emotional Decision-Making

With fewer trading decisions to make, investors can avoid the stress, hesitation, and impulsive mistakes that often come with active trading.

• Lower Risk Than DIY Trading

Passive investing naturally offers broad diversification across countries, industries, and currencies, helping reduce the risk of loss from any single stock or market event. ²

How to Start Passive Investing as a Beginner

Get to Know Index Funds and ETFs

Both investment types aim to replicate the performance of a benchmark index, but they differ slightly in how they’re traded:

• • Index Funds are mutual funds managed by asset management companies. They can be bought or sold only once a day, based on the net asset value (NAV) at the market’s close.

  • ETFs (Exchange-Traded Funds) are traded like stocks on the stock exchange and can be bought and sold in real time throughout the trading day.

Start with Dollar-Cost Averaging (DCA)

DCA is a strategy where you invest a fixed amount of money on a regular basis—typically monthly—regardless of market conditions. This helps reduce the impact of market volatility and is especially beginner-friendly.

Read more: DCA: A Simple Investment Strategy Anyone Can Use 

Build a Portfolio Aligned with Your Goals

Determine an appropriate asset allocation between stocks, bonds, and gold that reflects your financial goals and risk tolerance. A well-diversified portfolio helps reduce risk and supports long-term growth. ³
If you're interested in diversification,

Check out our article: How to Diversify Your Stock Portfolio for Long-Term Growth

Summary

Investing without constantly monitoring your portfolio isn’t just convenient—it’s a proven strategy supported by data and ideal for all types of investors, especially beginners or those with busy daily lives.

You can start your Passive Investing journey today with IUX—a platform designed for every investor, equipped with user-friendly and secure automated investment tools.

Start Passive Investing with IUX

Note: This article is intended for preliminary educational purposes only and is not intended to provide investment guidance. Investors should conduct further research before making investment decisions.