Costs and Benefits of Passive Investing
1. Active strategy entails costs: If you pick active strategy, you need constant flow of updated information. This can be very costly. In addition to that, you keep the track of your stocks every hour, minute or even second. Monitoring every movement is time consuming and may need a bunch of staff members to do so. On top of that, you must adapt to changing environment whether it is an external or internal and reevaluate your stocks accordingly.
2. Free-rider benefit
3. Involves investment in two passive portfolios
-Short-term T-bills
-Fund of common stocks that mimics a broad market index
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