Kickstart Your Corporation

Chapter 7Investing: Active or Passive?

If you've invested even a single dollar over the past decade, and likely even if you haven't, you've heard about the “active versus passive” investing debate. And before we dive into this topic, let's clarify something—the debate has a point!

Consider the ads you may have seen from discount brokerage firm Questrade: while those ads only tell one side of the story and are exaggerated in many ways and misleading in others, they are nevertheless hitting on something. And the reason that negative campaigns such as the Questrade ads work is that speaking generally, there is much need for improvement!

With that preamble in hand, we're now ready for this chapter, which covers the debate between passive and active management. Indeed, the debate that began several decades ago over the merits and shortcomings of active versus passive investment management is ongoing—and seems to be one of the investment world's most popular literary pursuits.

What You'll Get Out of This Chapter

In this chapter, we take on the hottest debate in investing: the “active versus passive management” debate. This issue probably inspires the most passionate commentary in the entire investment world, with each side amassing evidence to support their argument and points of view.

In contrast to that passionate, “winner take all” debate, however, in this chapter we present a different view: first, it's possible that both approaches have a place in your portfolio—but more ...