{"id":17714,"date":"2022-09-01T00:00:26","date_gmt":"2022-08-31T22:00:26","guid":{"rendered":"https:\/\/gerd-kommer.de\/blog\/passive-investing-the-basics\/"},"modified":"2025-12-19T18:49:58","modified_gmt":"2025-12-19T17:49:58","slug":"passive-investing-the-basics","status":"publish","type":"post","link":"https:\/\/gerd-kommer.de\/en\/blog\/passive-investing-the-basics\/","title":{"rendered":"Passive investing \u2013 the basics"},"content":{"rendered":"

By Alexander Weis<\/a>\u00a0and\u00a0Selina Gschossmann<\/a>\u00a0\u00a0<\/em><\/p>\n

This blog post is a brief introduction to passive investing. We would like to take those who would like to get a compact overview of investing with ETFs.<\/p>\n

This article assumes a moderate level of stock market knowledge. This means that you should know roughly what a stock, a bond and an ETF are and be familiar with concepts such as return and risk, at least in principle. (If you would like to refresh your knowledge, you can do so by taking a look at our glossary<\/a>, in which we explain the most important technical terms in the field of investment)<\/p>\n

In a first step, we provide an overview of the most important forms of investment, and in a second step we examine their return and risk. We then address the crucial question of investing (“do I want to be an active or passive investor?”) and show why passive investing is the superior alternative to active approaches. Finally, we present a “recipe” for a passive portfolio consisting of just two ETFs –\u00a0it couldn’t be simpler.<\/p>\n

If you are already familiar with the basics of passive investing, we recommend our slightly more advanced blog post “Factor investing \u2013 the basics<\/a>“.<\/p>\n

Has passive investing won you over and do you want to implement it easily and conveniently? We have the 1 ETF solution of Gerd Kommer: The L&G Gerd Kommer Multifactor Equity UCITS ETF<\/em>. Learn more ><\/a><\/p>\n

Let’s get started!<\/p>\n

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Asset classes –\u00a0an overview<\/strong><\/span><\/h2>\n

To avoid any misunderstandings, here is a classification in advance: In this article, we deal exclusively with liquid assets, i.e. we leave out types of assets such as human capital<\/a>, company shareholdings or pension insurance claims. There are two reasons for this: Firstly, the asset\/liability debate is irrelevant for most illiquid asset types because they can ultimately only be actively managed, and secondly, this is beyond the scope of our brief introduction.<\/p>\n

What are asset classes? Asset classes are logical groupings of assets that are relatively similar in terms of return, risk and liquidity.<\/p>\n

Here is an overview of the most important asset classes:<\/p>\n