About this lesson:
So far we have spent a good amount of time discussing the topic of individual stocks. However, some of you may not have any interest in investing directly into individual stocks but would prefer a diversified, passive style of investing instead.
Passive investing means you are handing over the day to day management of the assets to the professional fund managers, while the investor still gets to participate in the market.
As Warren Buffett says: If you don't have the time, knowledge, or desire to invest directly into individual stocks, then your best bet would be to invest in a passive fund, such as an index fund.
There are a few ways that investors can invest in a passive investment strategy. The two most common are Mutual Funds and Exchange Traded Funds, also known as ETF's. In this section, we are going to cover these two in detail including the pros and cons of each, the fees that you need to be aware of before investing in either type of fund, and a full side by side comparison of each strategy.
Here's what we cover: