Home Categories Finance What is difference between active and passive investors?| Updated 2022

What is difference between active and passive investors?| Updated 2022

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What is active investor vs passive investor in stock market
What is active investor vs passive investor in stock market

Introduction

This article will see who are active and passive investors, the difference between them. You choose to be any one of these investors.

Who are Active and Passive investors?

The active investor is the one who is ready to spend more hours of time to the market to understand the Price Action and the stock market.

The passive investor is the ones who are more focused on their professional life and their 9 to 5 Job. In the meantime, they are spending some hours in a week to the market to understand how the price is working, understanding their portfolio.

If your capital is less than 5,00,000 Rs and you are having a full-time job then it is better to focus on Passive Investing and being a passive investor we can make a good amount of money from the market.

If you want to become an active trader or an investor, then you must spend a minimum of 12 hours a week on the market?

Always work for other passive income so that you can build more capital and a minimum of 5,00,000 Rs capital is required to start the full-time trading to become an active investor.

Now we will see different time horizons for the investor.

Also, you can read: How many mutual funds to have in your Portfolio?

Fixing your Investment Horizon

Less Than 1 Year

In this case, the investor will think about making more percentage of return from the momentum stock. Trying to catch these small moves which are there within any of the sectors or stocks. The investor keeps on switching the stocks to make more returns.

3 Years Goal-oriented

In this case, the investor is investing towards a certain goal. The goal can be purchasing a new gadget ( Laptop, Mobile, Tablet ) or if you have a small loan offer your bike or car to fulfil that and if you want to have a vacation.

In this three year investment, we are focusing on the certain necessary thing which makes our life more comfortable.

5 Years Medium Term

In a medium-term plan or investment, we are focused on very specific goals. The goal is to complete the EMI of the car, Want to purchase a home in the next five years and get married to the loved one.

10 Years and More

If you are planning for 10 years and more then you are creating wealth. You have to plan accordingly and also include the retirement plan with the sufficient wealth created. If you are in your 20’s or 30’s then you can invest in a higher risk profile as well consistently invest the money as SIP. The power of compounding places a major role in the longer time investment.

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Conclusion

You can select according to your risk appetite and no one can decide your goal and plan. Please plan accordingly and start investing as soon as possible.

Also, you can read: How many mutual funds to have in Portfolio?

Thank you and Happy Investing.

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