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The investment industry loves word games.
One of the biggest?
“Active” vs. “Passive” investing.
But it's very hard to beat the market by trading in the market.
Alas, ask anyone what sounds better—active or passive—and they’ll pick active.
Here’s the simplified breakdown:
- Active means moving your money around often, hoping to strike gold.
- Passive means finding a good investment and sticking with.
But here’s the truth:
- Over long periods, staying invested has tended to work better than trying to time the market.
- Over long periods, the U.S. stock market has averaged roughly 10% a year including dividends (S&P 500 with dividends reinvested, compound annual return, 1928–2025; source: Aswath Damodaran, NYU Stern), though individual years vary widely and past returns don't guarantee future results.
- Chasing “active management” often leads to higher costs, lower returns, and more stress.
Why despite the evidence against it, is active investing pushed so hard?
Because commission-based advisors make money every time a trade is made.
More trades = more fees for them.
So is passive the answer?
Not necessarily.
We believe in a combination:
*Passive stock market investment
(because let’s be honest, you can’t beat the stock market by playing the stock market)
*Active, outside the stock market
(investments like real estate, data centers, and energy production, which are illiquid, can lose value, and aren't right for everyone)
Jones FWM is different, and we’re proud of that.
About the author
Founder of Jones Fiduciary Wealth Management. He spent nearly two decades on the legacy side of the industry before building a fiduciary advisory firm where the tax strategy comes first and the portfolio follows. Author of UnBrainwashed Investing.
