SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

How To Approach Passive Investing

Passive investing refers to an investment technique that seeks to increase returns by limiting purchasing and selling. One of the most popular passive investment strategies is index investing, this means that a group of investors buy a representative benchmark, and keep hold of this over a long period.

Investopedia defines passive investing as,  a buy-and-hold portfolio strategy for long-term investment horizons, with minimal trading in the market.’ There are several advantages of passive investing, including:

  • You Can Benefit From Low-Fees: When no one is choosing stocks, oversight is less costly. Passive funds use an index as a benchmark.

  • Simplified: Investors can clearly identify the assets that an index fund contains.

  • Tax Efficient: Buy & hold methods don’t usually land you with huge tax expenses.

  • Easy To Manage: When you own indices or an index, it’s easier to manage than a more complex investment strategy.

  • Reduce Risk: Indexes tend to include hundreds of investments and stocks, when you diversify you can reduce your risk of experiencing losses.

  • Takes Up Less Time: You won’t have to research individual stocks, the portfolio manager can be trusted to invest in the right index.

How to approach passive investing?

Frequent handling can increase fees and compromise performance, which is what passive investing seeks to avoid. The goal of passive investing seeks to build up wealth over time. Active traders aim to profit from short-term price fluctuations. With passive investing, it’s more about the long game.


Most passive investment strategies start with an index fund. These investments work by monitoring a market index, usually consisting of bonds and stocks. First, you’ll need to choose an index to fund, then select a fund to monitor your selected index. The third step is to purchase shares of that particular index fund.


Passive investing can help you to avoid the cons of active investing. A few of the cons of active investing include:

  • Active investing tends to be pretty expensive, with higher fees than passive investing. More purchasing and selling results in higher transaction costs.

  • These investments can be riskier, managers can go after high returns (which usually involve more risk).

  • Some of these portfolios tend to perform poorly, (particularly when you account for expenses and taxes).

To get started with passive investing, you can take the following steps:

1 . Select your index

Your starting point is to select an index, one of the most common options for index investing is the S&P 500 Index. This index includes 500 of the biggest publicly traded businesses across America and the index is based on market capitalization. Some of the other popular indexes include Dow Jones Industrial Average, MSCI Emerging Markets, or Russell 2000.


2. Choose a fund

Next, you’ll need to find a fund that tracks your index, there will likely be a few different options to choose from. When you’re choosing a fund you’ll want to look for a fund that accurately monitors the performance. You’ll also want to consider costs, (you may want to think about the least expensive funds). Some funds have restrictions that prevent certain investments, so you’ll need to check this also.


3. Purchase shares

The next step is to purchase shares within the index fund. You will be able to get an account with a mutual fund service, providing access to that fund. If you prefer you can open a brokerage account and get access that way. When you’re purchasing shares you’ll want to review features and expenses. When you’re deciding where to purchase from, these considerations may come in handy:

  • Commission-free: You might want to look for mutual funds or ETFs that offer zero transaction fees.

  • Make a difference: If you’re looking to make a difference with your investment, some index funds target companies involved in worthwhile causes, from the environment and social issues to female-led businesses.

  • Consider convenience: It’s easy to look for one provider who can meet all your needs, (this will depend on the type of investments that you’re looking to make).


The takeaway

With all these tips you’ll be ready to start investing. As you can see there are plenty of benefits of passive investing, from lower fees to less taxes, less risk, and simplified processes. Beginner investors can avoid the risks associated with active investing, and focus on making a profit over time. You don’t need much to get started from home, all you'll need is a decent laptop and you can get started on step one! If your Macbook has been playing up lately, this link can help you to speed it up. Once you’ve chosen your index, you’ll be well one your way, as a beginner it’s advisable to get all the advice you can.

This is a contributed post.

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles


  • How to Trade Cryptocurrency: A Guide for Beginners

    Trading is a core economic concept that includes the purchase and sale of assets, be it products or services, where the buyer compensates the price to the seller. In other circumstances, trading partners may want to exchange goods and other services.

    By Kim,

  • The Lessons in Business We Can Apply to Investing

    While running a business and investing are two very different things, there are a number of parallels that apply to both. If you are looking to start trading and you are running a business, or vice-versa, there are some lessons that you can carry from one to the other.

    By Kim,

  • 3 Methods To Invest as a Self-Employed

    As we all think about investing as a way to keep ourselves financially afloat, there is one group of people that the whole idea of trading and investing may seem more of a risk than normal. Self-employed people, who have to run their own business, trade as themselves, and essentially live a feast or famine lifestyle, could find themselves looking to invest or start trading but fall at the first hurdle because they do not have enough money or they are not able to put up with the risk. 

    By Kim,

  • Steady PutWrite 2021 Year In Review

    Steady PutWrite (SPW) launched in early 2019, so we now have close to three years of performance to evaluate on both an absolute basis and relative to the strategy’s benchmark, PUTW (WisdomTree CBOE S&P 500 PutWrite Strategy Fund). 

    By Jesse,

  • SteadyOptions 2021 Year In Review

    2021 marks our 10th year as a public trading service. It was our best year since inception. We closed 192 winners out of 270 trades (71.1% winning ratio). Our model portfolio produced 201.0% compounded gain on the whole account based on 10% allocation per trade. We had only one losing month in 2021. 

    By Kim,

  • Results of Trading Industry Survey

    Earlier today I distributed a press release with the results from the Trading Industry Survey we conducted in November. First off, I want to thank all of you who took the time to complete the survey. I greatly appreciate your participation and, as you’ll soon see, the results were intriguing.

    By Jared Tendler,

  • Questions to Ask Yourself Before You Start Investing

    Everyone has heard the success stories of people making tons of money from investments, retiring early, and living a life of luxury. But, before you start tying up all your cash in investments, it is crucial to understand more about what is involved.

    By Kim,

  • How To Use Tech To Improve Your Stock Trading

    Technology is undoubtedly helpful in many aspects, and stock trading is no exception. Over the years, the stock trading market has experienced improvements as a result of leveraging technology. For instance, stock traders can have faster access to more comprehensive data to help them make a more informed decision.

    By Kim,

  • Exploiting Earnings Associated Rising Volatility

    It was brought to my attention that Seeking Alpha now restricts the number of articles people can read for free, so I will reprint few of the key articles I wrote for SA. This one was my fist article, written in 2011, and it gives an introduction of the earnings straddle strategy that we have been using for the last 10 years with great success.

    By Kim,

  • Why And How To Trade Objectively And Keep Your Emotions In Check

    Trading on the stock market is a serious profession. Individuals can make a very lucrative return whether trading professionally or personally. To successfully trade on the stock market it requires years of dedication, practice and thorough market understanding.

    By Kim,


  Report Article

We want to hear from you!

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Options Trading Blogs Expertido