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What is the difference between active and passive investing?

In investing, the terms ‘active’ and ‘passive’ frequently come up. Both approaches have their advantages and disadvantages, but they differ in several key aspects. At Yieldfund, we specialized in passive investing in the crypto market. However, it’s important to understand what this means and how it compares to active investing. In this blog, we explain the differences between the two strategies, the benefits of passive investing, and how Yieldfund can help you achieve your investment goals without actively monitoring the market.

What is active investing?

Active investing requires frequent decision-making about your investments. This includes buying and selling stocks, bonds, or other assets, often in response to market changes. The goal of active investing is to outperform the broader market by entering and exiting positions at the right time.

Active investing requires a lot of time, knowledge, and experience. Investors who actively trade constantly follow the market, analyze company performance, economic indicators, and even political events that can impact financial markets. The challenge of active investing is not only making the right decisions at the right time but also managing risks and minimizing losses when markets become unpredictable.

What is passive investing?

Passive investing, unlike active investing, is a long-term strategy where you hold assets and let the market grow over time. Passive investing means less focus on daily market movements and more on following a broader market index or investing in a diversified portfolio of assets. The goal is to generate consistent and long-term returns without the high costs and stress associated with active trading.

Passive investing relies on automated strategies that focus on buying multiple assets to reflect the overall market’s performance. This is exactly what Yieldfund specializes in, using automated trading strategies within the crypto market. Instead of tracking the market yourself and constantly making trades, Yieldfund manages your investments for you, ensuring high and stable returns without the need for active involvement.

The benefits of passive investing with Yieldfund

  1. Less time investment: Passive investing requires far less time and effort than active investing. There’s no need to monitor daily market fluctuations or continuously analyze data. This is where Yieldfund excels, by using automated strategies, you can achieve high and stable returns without spending time or effort managing your investments.
  2. Lower costs: One of the biggest advantages of passive investing is lower costs compared to active investing. Yieldfund charges no transaction fees, ensuring that your entire investment is working for you. Unlike traditional platforms, which incur high costs that erode returns, Yieldfund ensures every euro you invest is optimized. This helps your capital grow faster, allowing you to fully benefit from opportunities in the crypto market.
  3. Reduced stress & risk management: Financial markets can be unpredictable and volatile. Active investing can be stressful, especially during sudden market shifts or when you regret an investment decision. Yieldfund minimizes market volatility risks by using automatic diversification across the top 100 cryptocurrencies. This protects your investment from sudden price swings. Additionally, payouts in USDC provide extra stability, ensuring that your returns are not affected by market fluctuations. With Yieldfund, you invest with minimal risk while still achieving high and stable returns.

Conclusion

Active and passive investing differ significantly in strategy, time commitment, and cost. While active investing requires deep knowledge and constant monitoring, passive investing through Yieldfund offers a stress-free and efficient way to achieve consistent returns. With automated strategies, low costs, and risk diversification in the crypto market, your capital grows steadily without the need for daily market analysis.

Yieldfund simplifies investing, making it accessible while allowing you to benefit from the crypto market with minimal risk.

Ready to turn your high-return dreams into reality? Start investing with Yieldfund today. With just a one-time investment, we take care of the rest, so you can sit back, relax, and watch your wealth grow!

Disclaimer: The content of this article do not constitute financial or investment advice.

Yieldfund's last trades

ETH-USDC
Long
5.23%*

Entry price
1702.0082

Exit price
1711.5500

Date
April 22, 2025

XLM-USDC
Long
-2.68%*

Entry price
0.2599

Exit price
0.2593

Date
April 22, 2025

SOL-USDC
Long
5.26%*

Entry price
145.0591

Exit price
145.8800

Date
April 22, 2025

*The trade percentages are the net percentages. The trade costs have already been deducted.

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