I was reading a post where the author said that if you are beginner start with passive investing that is investing in Index funds. But if you are investing for quite some time then invest in active funds. I think I do not agree with that author.
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As a beginner or experienced you can invest in passive fund aka Index fund. If we take active fund into account only handful beats the Index and thus it's better to not run after those handful and go with the Index fund itself.
In my case I have been investing for the last 7 years. I have invest in all kinds of active funds, some of them were good and most of them were unable to beat the index. So now I am in a process to move my active funds to the Index fund and thus do not have to worry about much of the rebalancing. Also the amount of money I am giving to the fund house reduced from over 0.50% to just 0.04% which is again a great value.
So whoever is saying that active fund is good than passive fund, have to understand that is his/her beating the Index fund. I'd yes, then is it beating continously or just for 1 year. If it's beating every year than great otherwise it's better to switch to the Index fund.
Like for me I have been investing into the Nifty 50 Index fund and Nifty Next 50 Index fund. And then for Midcap and Small Cap I have been investing from the active funds. And one more Index fund I have is a flexible cap which invests in both Indian and Outisde Indian stocks. Thus I have a mix of active funds and passive funds where the ratio of passive funds or Index is more because I am investing 70% into Large cap aka Nifty 50.
This way my portfolio have everything balanced out and thus if it's need rebalancing I only have to think about active funds and not passive funds.
