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Active v/s Passive Investing: Which Strategy Fits Your Investment Goals?​

What are Active & Passive Investing


What are Active & Passive Investing?

Active and passive investing are two distinct investment strategies. 

The active v/s passive investing debate has been going on for a long in the investment community, with proponents on both sides advocating for their preferred strategy. In this blog post, we’ll look into the intricacies of both of these. Let us start by understanding how are active & passive investing methods relevant in the present investment scenario

How are Active v/s Passive Investing Methods Relevant in the Current Investment Landscape?


How are Active v/s Passive Investing Methods Relevant in the Current Investment Landscape?

Active and passive investing methods are both relevant in the current investment landscape, each with its advantages and drawbacks. 

Active investing can potentially generate higher returns by outperforming the market but requires extensive research and expertise, which can result in higher fees. Passive investing provides a low-cost, diversified investment option that closely tracks the market but does not allow for individual stock selection. 

The endless debate of active v/s passive investing has highlighted the need for investors to consider their investment goals and risk tolerance carefully. With the rise of technology, passive investing has become increasingly accessible. However, active investing still has its place for those seeking potentially higher returns and are willing to accept higher risks.

Let us look at the difference between both investment strategies in detail.

Difference between Active & Passive Investing

Difference between Active & Passive Investing

Active and passive investing are two distinct investment strategies, with significant differences in their approach, performance, fees, and level of involvement.

  1. Performance- Active investing aims to outperform the market, while passive investing seeks to match the performance of a benchmark index. Active investing may yield higher returns but carries a higher risk, while passive investing typically generates lower returns but involves lower risk.
  2. Fees- Active investing involves higher fees due to the active management and research required, while passive investing typically has lower fees.
  3. Level of Involvement- Active investing requires more research, analysis, and decision-making, while passive investing involves minimal decision-making as it tracks a benchmark index.
  4. Role of Asset Allocation- Active investing often involves strategic asset allocation decisions based on market conditions, while passive investing typically follows a fixed allocation strategy.
  5. Future of Investment Management- The question of active v/s passive investing has led to the development of hybrid strategies, combining active and passive investing methods for potentially higher returns with lower fees.

While active investing has historically been the dominant approach, the growth of passive investing and technological advancements may lead to changes in the future of investment management.

Pros & Cons of Active Investing

Here are some pros and cons of active investing:

Pros of Active Investing-

  1. Potential for Higher Returns- Active investing may generate higher returns than passive investing by identifying undervalued securities.
  2. Flexibility- Active investors have the flexibility to sell underperforming active investments and seek new opportunities.
  3. Personalization- Active investing allows personalized investment strategies based on individual goals, risk tolerance, and market conditions.

Cons of Active Investing-

  1. Higher Fees- Active investing typically has higher fees due to the active management and research required.
  2. Higher Risk- Active investing involves higher risk due to individual stock selection.
  3. Difficulty in Outperforming the Market- Most active investors consistently fail to outperform the market.

Pros & Cons of Passive Investing

Pros & Cons of Passive Investing

Here are some pros and cons of passive investing:

Pros of Passive Investing-

  1. Lower Fees- Passive investing typically has lower fees compared to active investing.
  2. Lower Risk- Passive investing involves lower risk due to its diversified nature and lack of individual stock selection.
  3. Consistency- Passive investing seeks to match the performance of a benchmark index, providing consistent returns over time.

Cons of Passive Investing-

  1. Lower Potential Returns- Passive investing may generate lower returns than active investing due to its inability to identify undervalued securities.
  2. Limited Flexibility- Passive investors have limited flexibility to sell underperforming investments and seek new opportunities.
  3. Lack of Personalization- Passive investing does not allow for personalized investment strategies.

Now that we have seen the pros & cons of active v/s passive investing let us look at their current trends.

Current Trends in Active v:s Passive Investing 

Current Trends in Active v/s Passive Investing 

In recent years, the trend toward passive investing has gained momentum, with investors seeking lower fees and consistent returns. However, active investing still has its place, and trends suggest a move toward hybrid investment strategies. 

Here are some current trends in active and passive investing:

  1. Rise of ESG Investing- Environmental, Social, and Governance (ESG) investing has gained popularity, with investors increasingly seeking to match their investments to their values.
  2. Shift towards Hybrid Strategies- Many investors are adopting a hybrid approach, combining active and passive strategies to maximize returns while minimizing fees.
  3. Popularity of Index Investing- Index investing remains popular, with investors continuing to buy into popular passive funds.
  4. Importance of Investment Performance Review- As with any investment strategy, it is crucial to review investment performance regularly to identify underperforming investments and make informed decisions.

Overall, the investment landscape is constantly evolving, and it is essential to stay informed of current trends and adapt investment strategies accordingly. Investors should consider a hybrid approach and review their investment performance regularly to ensure optimal returns. 

We have seen the current trends in active v/s passive investing; let us now discuss the future of the same.

Future of Active v:s Passive Investing

Future of Active v/s Passive Investing 

The future of investment management is likely to see a continued trend towards passive investing, with its lower fees and more straightforward execution. However, active investing will still have its place, especially in identifying undervalued securities in emerging markets. Here are some likely future trends in active v/s passive investing:

  1. Greater Use of Technology- The use of technology in investment management is likely to increase with the emergence of robo-advisors and other digital platforms.
  2. Increased Focus on ESG Investing- Environmental, Social, and Governance (ESG) investing will likely become even more prominent.
  3. Importance of Asset Allocation- Asset allocation will remain critical to long-term investment growth, with investors allocating assets across a diverse range of investments.
  4. Growing Interest in Alternative Investments- Alternative investments, such as private equity and real estate, are expected to see increased interest in the future.

While the future of investment management is uncertain, it is essential to stay informed of potential trends and adapt investment strategies accordingly. Investors should continue to allocate assets for long-term growth while keeping a balanced approach between active v/s passive investing.

After all the points that we have looked at, let us now see how investors can decide what is right for them.

How Can Investors Decide Which Investment Style Is Right For Them

How Can Investors Decide Which Investment Style Is Right For Them? 

Deciding between active v/s passive investing can be challenging, and investors should consider their goals, risk tolerance, and investment timeframe. Here are some factors to keep in mind when choosing an investment style:

  1. Investment Goals- Investors should consider their investment goals and whether they seek higher or consistent, lower-risk returns.
  2. Risk Tolerance- Investors should consider their risk tolerance and decide if they are comfortable with the potential for higher returns with active investing or prefer lower-risk returns with passive investing.
  3. Investment Timeframe- Investors should consider their investment timeframe and consider if they are investing for the short or long term.
  4. Role of Asset Allocation- Asset allocation is critical to active and passive investing, and investors should look at diversifying their portfolios across various investments.

Overall, there is no one-size-fits-all approach to investing, and investors should consider their unique circumstances and investment goals when choosing between active and passive investing. Investors should seek professional advice and review their investment strategies regularly to ensure they align with their objectives and risk tolerance.

In the final section, let us also look at an investment alternative that can help you grow your wealth & build your legacy, despite the ongoing economic tensions. 

The Bottom Line


Active v/s Passive investing is a topic of much debate in the finance industry. Active investing involves selecting individual stocks and making investment decisions based on market trends and analysis. On the other hand, passive investing involves buying and holding a diversified portfolio of stocks or funds with minimal trading or analysis. While active investing has the potential for higher returns, it also comes with higher costs and risks. In contrast, passive investing is a more cost-effective and low-risk strategy that can provide steady returns over the long term.

Ultimately, the decision between active and passive investing depends on an individual’s investment goals, risk tolerance, and financial situation. Those seeking higher returns and willing to take on more risk may prefer active investing, while those seeking steady, predictable returns may prefer passive investing.

Frequently Asked Questions-

  • What is the difference between active and passive investing?

Active investing involves picking individual stocks or assets to outperform the market, while passive investing involves tracking an index or market as a whole with the aim of matching its performance.

  • What are the pros and cons of passive investing?

Passive investing’s pros are low costs, easy management, and broad diversification, and the cons are less customization and limited potential returns.

  • Can active and passive investing be combined to create a hybrid investment approach?

Yes, investors can combine active and passive investing to create a hybrid investment approach. This approach is known as smart beta or factor-based investing, which seeks to capture market returns while incorporating elements of active management.

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!