Active Vs Passive Investing: Which is Right for You?

Channeling your extra money into high-quality investments is always a good way to preserve and even expand the value of your funds for future purposes.

The hard part is deciding what to invest in and how, especially with geopolitical tensions on the rise, the global economy in a flux and financial markets more volatile than ever.

It’s not as difficult as it seems to choose a product or investing strategy that suits you though. Here are a couple of tips on how to reap more rewarding returns from your investments:

Understand what kind of investor you are.

Investing can be active or passive but it really boils down to your personality and lifestyle when deciding which strategy suits you better.

Passive investing, for example, is suitable if you are risk-averse or always busy, as it merely involves you parking money in the stock market or an index fund and enjoying a cut of the profits when they are generated.

Passive investors ignore short-term price fluctuations and are typically invested for the long term, sometimes for years or even decades. The upside is that the fees are low and returns are usually steady and predictable. The downside, though, is a much lower probability for growth and making large windfall gains.

Active investing, on the other hand, is for more ambitious investors who have an appetite for risk. It involves taking an active, hands-on role in managing your portfolio, with the aim of taking advantage of short-term price fluctuations to beat the market.

The upside to active investing is handsome returns. The downside is its risky business. It is also pretty much a full-time job, as active investing involves large amounts of time and effort, usually on a daily basis, and no small amount of stress.

It involves a deep level of market knowledge and the confidence to execute a trade at the right time. If you’re a trader in foreign currencies, for example, having enough knowledge to correctly predict the direction of the US dollar would be highly crucial to a windfall trade.

Customise your investment strategy.

Ideally, everyone of us would be an active investor, reaping handsome rewards by deftly beating the market. The reality though, is most of us will be unable to avail the time and effort required to be successful at active investing, and are likely to resort to passive investing, accepting the low returns and long-term commitment involved.

But one way to get the best of both worlds, that is, reaping higher returns without the hassle and stress of getting involved, is by passively investing in an actively-managed fund.

CP Global is a worthy consideration in this regard. Actively run by veteran macroeconomic expert and fund manager Raymond Tan, whose flagship strategy ‘CPS-Master Portfolio’ has consistently generated returns in excess of 20% since its inception in 1998.

Notably, Raymond has a track record of outperforming the market during economic downturns, such as the dot-com bust, the 2008 Global Financial Crisis, and more recently, Brexit:

It is Tan’s unique expertise in currencies and the macroeconomy combined with his active monitoring of price movements and carry signals in executing trades that has helped to generate those returns.

With financial markets harder to predict than ever, now might be a good time to entrust your money to a reputable and experienced fund manager.

Disclaimer: This article does not constitute an offer or solicitation to anyone in any jurisdiction in which such offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Investments are subject to investment risks including the possible loss of the principle amount invested. Past performance of the CP Global funds is not necessarily indicative of its future performance. The performance of the CP Global funds are not guaranteed and the value of the units in the CP Global funds and the income accruing to the units, if any, may fall or rise. All fund prices, if any, shown here are indicative and are subject to change without prior notice. CP Global accepts no liability for any loss whatsoever arising directly or indirectly from any use of or reliance on the information provided on this page.

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