Financial Terms / O - P / Passive investing

Passive investing

Passive investing is an investment strategy that focuses on maximizing returns by buying and holding securities, such as stocks, bonds, commodities, etc., for long periods. This buy-and-hold strategy reduces the transaction and brokerage costs brought about by frequently buying and selling. 

Investors following the passive investing strategy usually buy and hold broad, market-cap-weighted index funds such as the S&P 500 or the Total World Stock Index Fund ($VTWAX).