In the world of investing, there are different paths that one can take to achieve their financial goals and targets. People like to invest to generate passive income over a period of time. Two prominent investments focus on passive investing - mutual funds and alternative investments.
A clear idea about them before investing can help you determine the right strategy.
So what are they? Or how to know which one will work for you? Read more for insight into both strategies to help you decide which is better.
Passive investing is a long-term investment strategy involving buying and holding assets for a longer period of time instead of frequent turnover to match market expectations. Passive investing aims to blend and match the market performance rather than surpass it. Passive investments include ETFs, Index Funds, Fixed Deposits, Corporate Bonds, Startup Equity, etc.
The primary factors to keep in mind while passive investing include:
Let us discuss Mutual Funds and Alternative Investments as important passive investment instruments.
Mutual funds are a pool of money managed by professional fund managers. Multiple investors invest money for a particular objective, which is then invested in promising securities. Thousands of options are there when planning to invest in mutual funds. There are different categories of Mutual Funds, which are detailed below.
As the name suggests, alternative investments are assets other than traditional ones, like stocks, fixed deposits, and mutual funds, due to their non-market-linked nature. They offer better returns than fixed deposits and better security than stocks. Some of the examples of alternative investments that can offer predictable returns are:
Passive investment is a lucrative way towards wealth generation. It requires investors’ minimum involvement and time. However, researching and analysing the benefits and drawbacks of the available options is essential before investing. Ultimately, the money matters and capital appreciation is the key attraction for any investment decision.
In pursuing returns, the choice between mutual funds and alternative investments ultimately depends on your investment goals, risk tolerance, and time horizon. Some investors choose to allocate a portion of their portfolio to alternative investments while retaining the investment in mutual funds. In contrast, others prefer exposure to alternative investments more than mutual funds. This hybrid approach aims to capture the benefits of both worlds.
Passive investing does not outsmart the market. It mirrors the market in your portfolio and allows you to enjoy returns in the long term. Curious to learn more about passive investing instruments? Grip is the platform for you! It offers a range of investment opportunities and guides you through the process.
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