💡 Trading vs. Passive Investing vs. Saving – The Risk, the Reward, and the Long Game
In trading and investing, the rules never change: No Risk. No Reward.
My results this year are a live case study in how three different approaches can play out in practice.
1️⃣ Actively Traded Portfolio: +11.4%
For the past 200 days (~7 months), I’ve deposited $500 each month into my actively traded account.
Today, that account sits +11.4% above my total contributions.
To match that in a savings account, you’d need a whopping 42% annual interest rate—good luck finding that at your local bank.
The catch? This return came with volatility. My monthly P&L has ranged from +17.1% to -13.6%. You have to stomach those swings without panic-selling and stick to your winning strategy.
2️⃣ Passively Invested Portfolio: +4.2%
Alongside active trading, I’ve also been depositing $500 per month into a global index fund.
After the same 200 days, that portfolio is up +4.2%.
Lower than my trading return, yes—but still far better than a savings account.
Volatility has been smaller than in my trading portfolio, but still noticeable for an index fund.
For context, globally diversified index funds have averaged about +7% annually over decades. My +4.2% in just over half a year is well on pace for that—and actually outperforming on a time-weighted basis given the monthly deposits.
3️⃣ Savings Account: +0.7%
Savings accounts are steady, predictable, and risk-free (within deposit guarantees).
But with typical rates currently under 2% per year in Sweden, inflation quietly erodes your purchasing power.
They’re perfect for emergency funds or short-term goals—but they can’t compete with investing or trading for long-term growth.
Risk, Reward, and Personality Fit
Results so far:
| Approach | Return (7 months) | Typical Long-Term Annual Average | Effort Level | Volatility |
|---|---|---|---|---|
| Active Trading | +11.4% | Highly variable | High | High |
| Passive Investing | +4.2% | ~7% | Low | Moderate |
| Savings Account | ~0.8–2% | ~2% | None | None |
The Long Game
If I keep these monthly contributions going for 10 years, here’s the math:
- Active Trading (current pace ~42% annualized): ~$902,880
- Passive Investing (7% annual): ~$87,047
- Savings Account (2% annual): ~$66,470
Important: This $902,880 figure is purely hypothetical. It assumes I could sustain my current 7-month performance pace (~42% annualized) for a full decade — which is extremely unlikely in reality. Active trading returns can swing dramatically year to year, and there will almost certainly be losing periods along the way. This projection is for illustration purposes.
This is exactly why I started the 25-Year Trading Experiment—to see the compounding effect of active trading vs. passive investing over decades, with all the ups and downs included.
📈 Hypothetical 10-Year Portfolio Growth Projection
Assumes current 7-month average returns for active trading and passive investing, with monthly $500 deposits.
Final Thoughts
There’s no one-size-fits-all. It depends on your goals, time horizon, and personality.
- Active trading: higher potential returns, but requires a profitable trading strategy, discipline, and emotional resilience.
- Passive investing: a balanced growth path with minimal effort—historically beating most active traders over the long term.
- Savings accounts: safe, accessible, but slow-growing.
The goal is finding a mix that keeps you both financially on track and emotionally comfortable.
💬 How do you balance your own portfolio? Drop your approach in the comments—I’d love to hear your take.