Active vs. Passive Investing

In personal finance, there is a difference between active investing and passive investing.

Active investing involves looking for the next great investment to trade or buy. You research companies, analyze the data, and then buy or sell based on your findings. You are trying to beat what you can get from the broader stock market.

Passive investing means putting your money into things like index funds. You basically just buy and hold and try to get normal market returns.

Passive investing is the smart move with your personal finances. There are very few active investors that can consistently beat the market.

However, with your career, you want to be an active investor. This is because there are concrete things you can do to juice your returns. You can choose a high paying industry, improve your skills, negotiate salary, etc.

If you are passive, and just take a job because it's fine and then just hope for raises and promotions, you will get sub-optimal returns.

Going 1099 is like active investing. It forces you to do things to improve your return on investment. You can beat a passive career strategy many times over with some effort.

In personal finance, be a passive investor.

With your 1099 career, be an active investor.

Want the full playbook? Check out Going 1099.