Posted on 10/4/2023 6:30:00 PM

Yin and Yang are well-known concepts that represent contrasting yet complementary forces or elements. They are two opposite and interconnected aspects of existence where one cannot exist without the other.

Day and night are classic examples of Yin and Yang. Day signifies Yin with its light, warmth, and activity. Meanwhile, coolness, darkness, and stillness during the night depict Yang and form a natural rhythm with Yin.

This way, they create a continuous cycle and bring balance. Now, you might be wondering how the concept of Yin and Yang intertwines with investment.

Here is a question for you. Which category would you belong to if you were to invest? A paragon of calm and steady stability or dynamic decision-maker and strategist?

The path you take when investing makes all the difference in growing wealth!

The distinction centers around active and passive investing. Many investors debate and advocate for one approach over the other. But the thing is- why do you need to choose one when they are complementary and not mutually exclusive?

So, can finding the perfect investment strategy be as elusive as discovering the harmony between yin and yang? Considering active better than passive strategy or vice versa is not precisely how you navigate the financial waters.

Let’s understand how blending the Yin and Yang in the financial world may be your key to unlocking financial success.

Yin: Passive Investing Approach

Passive investment seeks to replicate or track the performance of a specific market index or benchmark. ETFs (Exchange-Traded Funds) or index funds that mimic a particular market index are examples of passive investing. It is Yin because it is passive in nature and does not involve regular portfolio churning.

Here are the notable characteristics highlighting the qualities of Yin in passive investing.

1. Investing with a steady approach

Yin symbolises stability and calmness. Passive investing by tracking the underlying index , aims for long-term stability. It minimises frequent buying and selling of assets yet exposes you to a diversified asset set depending on the index the scheme follows. The unwavering stance can even out short-term ups and downs and helps you weather market fluctuations in the long run.

2. Taking it Easy

Avoiding excessive action is one of the principles of Yin. Passive investing can reduce the need for market timing. You adopt a method where one need to make fewer trading decisions. It eventually decreases the anxiety associated with predicting market movements every other day.

3.  Embracing Tranquility and Poise

The stock market can be an emotional rollercoaster. It often causes anxiety and stress. Reacting emotionally to market noise can lead to impulsive decisions and may erode long-term gains. Passive investing is designed to decrease the emotional reactions to market turbulence. Planting your money in passive investment options could bring inner peace to the journey.

Passive investors possess a unique understanding of the financial landscape. Their strengths lie in their belief and resilience to their chosen path. It mirrors receptivity, stillness, and patience, among other prominent qualities of Yin.

Here's how it works: Instead of getting emotionally entangled with each company's ups and downs, passive investors choose to invest in index funds or ETFs that closely mirror the index's movements. It's akin to going with the flow of the market rather than trying to swim against the current.

Yang: Active Investing Approach

Active investment is where investors/fund managers have to actively make decisions to select specific securities and assets. It includes individual bonds, stocks, or other financial securities with the potential to surpass the benchmark.

In the Yang corner, you become an investor who is ready to battle market volatility and aim to execute lightning-fast trades. You scrutinise market data and news and identify possible -rewarding assets and stocks.

Here are some features of active investing that align with the Yang aspect.

1. Adapting to Changes

Yang is associated with change and adaptability. Active investing keeps you on your toes and requires you to adapt your strategies to evolving market conditions. You actively seek new opportunities, tune your portfolio, and make quick decisions to respond to the economic and financial environment. This is where we should talk about one of the major benefits of investing in mutual funds. Mutual funds have fund managers who are responsible for making the investment decisions to achieve the scheme’s investment objectives. So if you are inclined towards the Yang path, you may choose Mutual Funds to gain expertise of the fund managers’ with regard to handling your investments.

2. Always on the Move

Active investing involves frequent buying and selling of assets, continuous market analysis, and investment monitoring. Investors/fund managers constantly capitalise on market movements and seize opportunities through timely decision-making. The high level of activity and vigilance matches the dynamic and active nature of Yang.

3. The Fire for Growth

Yang embodies competition and the desire for growth. The market is nothing less than a playing field for active investors and the fund managers. They view investing as a competitive arena and endeavour to surpass the average market returns through skill and experience.

4. Investment Explorers

Ambition and risk-taking traits are often linked to Yang. Active investors usually take calculated risks in pursuit of higher and better returns. Risk taking traits involve investing in individual stocks, trade, or pure equity based mutual fund schemes. All such options accompany a higher risk level than passive strategies.

Active investors shape the market and contribute to its development, similar to how Yang drives change. Their dynamic decision-making, adaptability, and assertiveness resonate with the qualities of Yang and represent a proactive force.

Finding Balance

Active and passive investment strategies are not contrary or opposite but complementary.

In simple terms, they work best when together.

Investing is like finding balance between two approaches, much like the harmony of Yin and Yang in Chinese philosophy. Try both active and passive strategies to see what fits your goals. Active investing involves making choices and keeping an eye on the market, while passive strategies are more steady and long-term. By blending these two, you can manage your money in a changing market and seek to find financial balance.

An investor education and awareness initiative

Visit www.icicipruamc.com/note to know more about the process to complete a one-time Know Your Customer (KYC)requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (http://www.sebi.gov.in/intermediaries.html). For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints on https://scores.gov.in if they are unsatisfied with the resolutions given by AMCs. SCORES portal facilitates you to lodge your complaint online with SEBI and subsequently view its status.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Tags:
  • Did You Know?

    You can transact faster and enjoy more features on ICICI Pru AMC once you log in!

    Login Now
  • Need to talk?

    Call on our Toll free number 1800 222 999(BSNL/MTNL)

    or Get a call back

  • Follow Us

    The latest from ICICI Pru AMC, including our unique, industry-leading programs, conferences, reports, and special events.

Recommended fund