Which investing approach is a hands-off strategy that tracks the market and tends to have lower fees?

• A. Robo-Advisor
• B. Market Index
• C. IPO (Initial Public Offering)
• D. Passive Investing

Answer: (D)

Passive investing focuses on mirroring the overall market rather than trying to beat it. By buying broad market index funds or ETFs, you own a slice of many companies and let the market's overall growth drive your returns, which means you trade less and don’t chase hot picks. Because there’s minimal active management and fewer trades, fees stay low, making this a cost-efficient, hands-off approach. An IPO isn’t a strategy for tracking the market; it’s the sale of new shares and involves individual stock risk rather than broad market exposure. Robo-advisors can automate investing, but they often add advisory fees, whereas pure passive investing uses low-cost index funds to achieve the same goal with fewer costs. The market index itself is a benchmark you aim to track, while the actual investing strategy that does the tracking is owning index funds or ETFs.