Passive investing means buying and holding a market index rather than trying to pick winning stocks. Instead of paying expensive fund managers to select stocks, you buy an index fund that automatically owns every stock in a benchmark like the S&P 500 or Nifty 50. You accept market returns — no more, no less.
Jack Bogle founded Vanguard and created the first index fund in 1976 — Wall Street laughed and called it "Bogle's Folly." Today, passive funds manage over $15 trillion globally and have surpassed active funds in total assets. Vanguard's S&P 500 index fund charges just 0.03% in fees vs. 1-2% for active funds.
The case for passive investing is overwhelming: over 90% of active managers fail to beat their benchmark index over 15 years. After fees, taxes, and trading costs, passive investors come out ahead. Warren Buffett bet hedge fund manager Ted Seides $1 million that an S&P 500 index fund would outperform a basket of hedge funds over 10 years — Buffett won decisively.