Do you want to have excellent control over your financial situation? Well, there are a lot of good investment plans to achieve this. Shares, indices, Forex and even virtual currencies are good examples of active investing. In general, to have your portfolio created and start investing, you will need a reputable brokerage service such as HubbleBIT, which offers a variety of investment plans. Read more about their offer in HubbleBIT Review.
Before venturing into investment in any type of assets, it’s highly advisable to educate yourself about the main characteristics of the market. The golden rule says: never invest in something you don’t know anything about.
Now, let’s discover in this article the best available active investment.
Active Investing – Definition
An investment is a type of expenditure made to increase the fortune of the person who embarks on it. It is said to be active if the investor intervenes in decision-making related to:
- its management;
- The assets.
Thus, active investment is an expense in which the investor retains control of the situation and participates in decision-making in order to grow his investment. Idea active investment allows investors to be heard in decision-making and also to enforce their decision.
Active Investment or Passive Investment
The main parameter that differentiates active and passive investment lies in the management mode. Here are the parameters that differentiate these investments:
In securities management, the goal of active investing is to beat market performance while passive investing aims to faithfully replicate it;
In passive investing, the portfolio manager is the one who does all the operations on behalf of the investor. The opposite happens in active investing here the manager does practically nothing because the investor himself is active and takes care of everything;
The active investor uses a permanent watch style and is attentive to the market. The opposite happens with passive investing, and the investor is less apt in the market;
Finally, active investment is that type of investment where the investor applies while passive investment is that type of investment where the investor does not apply.
The Purpose of Active Investing
Note that active investing is a strategy that aims to beat the return of a benchmark index. To put it simply, the objectives of the active investor are:
- Participate in decision-making;
- Closely monitor the evolution of its finances;
- No more having to deal with expensive management fees like passive investing
- Outperform average stock market returns;
- Take advantage of short-term price market volatilities
Active Investing: How does it work?
Active investing is based on a practical approach and requires the intervention of a portfolio manager. The latter closely follows two batches of analysis, namely:
- Qualitative analysis;
- Quantitative analysis.
As a result, an investor can easily find the level at which prices will experience a variation, the time to place a buy or sell order. This will allow the active investor to place the buy or sell order at the right time. The active investor must consider this survival principle in the financial markets “to be more often right than wrong”.
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