Called buy and hold, which is described in passive investing related articles. It is a very common saying, and I think a large part of the reason passive investing is called passive is because of the passive relationship of buy and hold. In addition, passive investment is also called "Index Investing", because passive investment is an investment method of buying and holding an index, and it is also called indexing investment in Chinese. I personally think that indexed investment is better than passive investment, because the word passive investment will give us a derogatory feeling. In our life, the adjective passive is a relatively bad impression. If a student passively studies, if an employee passively works, if a chef passively cooks, if a lawyer passively litigates, every description that sounds is not positive feedback. But, that's it. But in the field of investment.
Being passive and not active is the investment attitude we should take. No matter what happens in the market, it's best not to move. Staying on the course is the best behavior. It's just that due to the perception of society, the word passive tends to give number list people a bad impression, which is a bit of a pity. So, next, I will describe the passive investing style we want to use using indexed investing. To adopt indexed investment, that is, to choose a certain kind of target and buy and hold it for a long time, the key lies in the tracked index. There are only hundreds of indices (World Index, Taiwan Weighted Index, Taiwan 50 Index, Taiwan High Dividend Index…), which one is the indexed investment we want? Expecting indices that deliver positive returns in the long run is the key. For example, the world index below contains world-class and famous companies, such as TSMC, Coca-Cola, Apple, Google, Amazon, etc. The history of the index represents the economic growth process of human beings all over the world. Although the process in the middle is ups and downs.
There are still obvious declines, but in the long run, it is the continuous upward growth. Image-3 Author provided If we don't look at the world, the index of Taiwan, which is the closest to us, the Taiwan Weighted Return Index is also growing continuously. picture Author provided Therefore, the indexed investment method we have to do is: Do not spend time doing research and predict the market trend, invest in a market index that is expected to bring long-term positive returns, buy and hold all investment targets in the market, and then obtain market returns, which are equivalent to the average return of all investors. The point of indexed investment is to hold all the investment targets in the market and try to obtain returns close to the market, but this is slightly different from the passive investment known to the public, and the key lies in "whether the tracked index can reflect the market's "Trend" is the main difference, because not every index represents the trend of the market, and more are indexes that contain strategic stock selection . If you want to hold the investment target of the whole market, you usually choose a low-cost index type. Funds and Index Equity Fund ETFs do this easily.