The personal trainer asks behind the counter whether you are interested in an active or passive gym membership.
“With an active membership, you get to the gym to do squats and biceps. Passive membership does not require coming to the gym, but the results are on average the same as those actively training in the gym. Which one should it be? ”
If such an option existed, we would all be at least passive fitness enthusiasts. That’s why I was greatly confused when, even as a business student a few years ago, I didn’t know how passive index investing works.
I imagined for a long time that activity on the stock exchange means trading for thousands of euros and passivity means not investing. Although investing (or rather returning) as an economics student was of interest, it seemed like a hobby to a distance. My tough monthly salary is at least three tons. When I had time to read through all the important works.
The stubbornness ended when I also realized that a passive investor could make a profit. Even as good a return as an active investor on average. My chin snapped open and I lit the stock. How had no one told me about this before?
I selected a few index funds and ETFs and signed a monthly savings agreement. Suddenly I too had become an investor.
Three reasons to invest in the index
Getting started with index investing was easy. It was enough that I had the basics of the stock market. Although I have since been going through them through important works, still feel a passive investment strategy suitable for myself is best.
By investing in the index, I caught the stock market with little money. I invest 50-150 euros a month in the funds. I don’t earn three thousand a month, but I see when the investment is successful nonetheless!
As a passive investor, I never have to repent. I’m not saying I’d have bought it or sold it. Instead, I have a strategy where I stick to whatever the weather. If the portfolio is in the red, I get fund shares cheaper than before. If the portfolio is on the plus, well, then the return-seeking economist is happy.