Hi friends. Thanks for joining me on the Money Girl Podcast. I'm Laura Adams.

When it comes to investing, there are two broad strategies or philosophies, active investing and passive or lazy investing.

In this podcast, I'll give you the major pros and cons for each

of the strategies, tell you what the researchers say, and give you an important tip to

boost your investment returns.

First off, let me explain active investing. An active investor likes to buy and sell various kinds of investments,

like stocks, mutual funds, exchange-traded funds, and commodities on an ongoing basis.

They keep a close eye on the markets and make decisions like buying a stock when the price dips and selling it when the price goes up so they can make an immediate profit.

The goal of an active investor is to time the market in order to take advantage of short-term price movements.

As you can imagine, if you're really good at active investing,

the upside could be massive.

But if you're not, an investment that turns sour could leave you with massive losses.

Not only can timing the market be risky, but it can be expensive, because you generally have

to pay a trading fee every time you make a transaction, which can really take a bite

out of your earnings.

Additionally, it takes a certain level of expertise to understand how to read performance charts,

use professional trading software,

and understand how changes in different types of industries and interest rates

relate to the future price of your investments.

On the other hand, passive investing is just what it sounds like.

It means you really don't do much, hence the lazy factor. Passive investors take a long-term view of investing, which is also known as a buy-and-hold strategy.

The idea is that they make consistent but limited purchases of investments that should appreciate over long periods of time.

...