Success by JazE Edutech / Interactive Tool
Interactive Tool
Passive investing means matching the market with low-cost index funds instead of picking stocks. Race both strategies across 25+ years and watch fee drag compound.
Passive investing is a buy-and-hold strategy that aims to match the overall market by holding a broad, low-cost index fund or ETF, rather than trying to beat it through stock picking, market timing, or higher-fee active management. Its edge comes from three things investors can actually control: rock-bottom fees, wide diversification, and decades of uninterrupted compounding.
Explore the eight-beat learning path lab and scenario practice prompts below.
Full written guide, sources, and FAQs
Race a low-cost index fund against a hands-on active strategy across 25+ simulated years and watch fees, skill, and effort pull the finish lines apart.
This resource helps readers connect what is passive investing to classroom practice, standards-aware implementation, and responsible next steps for schools and sponsors.
Passive investing is a buy-and-hold strategy that aims to match the market rather than beat it. Instead of researching individual companies or paying a manager to trade in and out of positions, a passive investor buys a broad index fund or exchange-traded fund (ETF) that owns a wide slice of the market at once — for example, a fund tracking the S&P 500 and its roughly 500 large U.S. companies.
The strategy's appeal lies in what it removes: costly turnover, second-guessing, and the pressure to be right about single stocks. SPIVA scorecards from S&P Dow Jones Indices have consistently shown that the large majority of actively managed U.S. large-cap funds trail the S&P 500 over long horizons once fees are counted — which is why low-cost matching has become the default starting point in investor education, including the SEC's Investor.gov guides.
The Fee-Drag Derby is an interactive race between two portfolios facing the same market. In the passive lane, an index fund quietly earns the market's average return while its tiny annual fee sips at the balance. In the active lane, you design a hands-on approach — a higher expense ratio and a skill edge you hope is real, plus the picking and monitoring that approach demands in real life.
Press start and the simulator plays out 25 years or more, updating both balances every simulated year. The finish-line report then sets three verdicts side by side: each portfolio's ending value, the total fees each lane paid, and the gap between the two lanes. The race is deliberately transparent — every assumption is visible, and the math is simple compounding you can check by hand.
This simulator is a teaching model, not a forecast. It does not predict real returns, recommend specific funds, or promise any outcome. It answers one question clearly: given the same market, what do fees, skill, and time do to a portfolio over decades?
Every input is either shared context or a lane decision, so the comparison stays fair: both portfolios start with the same money, receive the same contributions, and face the same average market return. Only fees, skill edge, and race length differ — exactly the levers a real long-horizon investor would weigh.
The finish-line report lists each lane's ending balance, the cumulative fees it paid, and the gap between them. The passive lane's number shows where the whole market's return would have carried your money on its own. The active lane's number shows the same market working for you, minus what fees took and plus or minus whatever your skill edge added or cost.
The most instructive figure is usually the gap in the middle years, not just the end. For the first decade the lanes sit close together — the fees look like pocket change. In later decades the divergence accelerates, because every dollar of fee drag also loses all the compounding that dollar would have earned. That widening spread, not any single year's charge, is the real price of the active lane.
Treat every output as an illustrative estimate built for comparison, discussion, and gut-checking — useful in a classroom debate or a family money conversation, never a projection of your personal future balance. Real markets swing year to year; this model deliberately smooths that out so the structural forces — compounding, costs, behavior — stand out clearly.
Every model simplifies, and this one simplifies in specific, deliberate ways. Knowing the assumptions is part of the lesson: the race isolates the forces a long-horizon investor actually controls — cost, diversification, patience — while setting aside the noise that makes real investing emotionally hard.
The derby's default settings are not arbitrary — they track the published record. S&P Dow Jones Indices' SPIVA scorecards have consistently reported that the large majority of active U.S. equity funds trail their benchmarks over 15- and 20-year periods after fees, and Morningstar's Active/Passive Barometer has reached similar conclusions across fund categories.
Cost is the quiet engine of that record. Vanguard's principles-for-investing-success research frames costs as one of the few things investors can actually control, and the SEC's investor bulletin on index funds highlights the same trade: broad diversification and low turnover in exchange for accepting whatever the market does. The derby turns that research into something you can watch happen.
For teachers, the derby doubles as a 15-minute classroom activity. Have half the class configure an active lane with a 1% fee and zero edge, and half configure a passive lane, then run both on the projector. The resulting gap gives students a concrete number to argue about — and a durable intuition for why so many workplace retirement plans are built on index-style defaults.
The derby covers long-horizon strategy; SuccessEdu's other interactive tools cover the mechanics around it. Use them as a set: the race shows why strategy choice matters over decades, while the tools below handle the specific math each decision raises.
This simulator is an educational model built for students, parents, and teachers. It does not provide financial, investment, tax, or legal advice, and it does not recommend any specific fund, strategy, or provider. All figures are illustrative estimates based on the assumptions you enter, not forecasts of market performance or guarantees of any outcome.
Investing involves risk, including the possible loss of principal, and past performance — including the historical patterns described in cited research — does not guarantee future results. Before making real financial decisions, consult a qualified professional who can consider your complete situation. Success by JazE Edutech provides this tool for learning and discussion only.
Close, but not identical. Passive investing is the strategy — matching the market and holding for the long run. Index funds and ETFs are the most common vehicles for executing it, because they hold a wide slice of the market for a tiny annual fee. You can technically buy and sell an index fund frequently, but the patient strategy is what makes the approach passive.
Yes. A passive fund falls when its market falls, because matching the market includes matching its downturns. The strategy reduces picking risk and cost drag, not market risk. That is why this simulator assumes a long horizon — longer holding periods have historically smoothed outcomes — while nothing eliminates the possibility of loss.
An expense ratio is the percentage of your investment a fund charges every year to run itself. It sounds small, but it compounds in reverse: every dollar taken in fees also loses all the growth that dollar would have earned for the rest of your holding period. The derby's fee inputs exist to make that reverse compounding visible.
It can be, in specific stretches and categories — some active funds do beat their benchmark in a given year. The evidence problem is persistence: scorecards like SPIVA consistently find that beating the market after fees over long periods is rare. The simulator lets you test what edge would be required and how expensive even a small one is to chase.
It means long, uninterrupted holding periods have historically rewarded investors more than jumping in and out based on predictions. Timing requires being right twice — when to leave and when to return — and missing even a handful of the market's strongest days can drag long-run results. Passive investing leans on time in the market by design.
The ROI calculator shows how fees erode the return of a single investment decision. This page races two complete long-horizon strategies side by side across 25-plus years, adding contributions, skill edge, and effort to the comparison — so you see strategy-level outcomes, not just one fee deduction.
The core habits — low costs, wide diversification, patience — are among the most valuable lessons a new investor can learn, and custodial accounts let parents open investing accounts for minors. The right first move depends on your family's situation; this tool teaches the trade-offs rather than telling anyone what to buy.
S&P Dow Jones Indices
U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission
Morningstar
FINRA
Compound interest is interest earned on interest. Adjust the sliders and watch the compound lane pull away from simple interest in a side-by-side growth race you can run in class.
Turn the beginner question 'how do I invest in stocks' into a four-lesson classroom unit with key-term cards, a risk-and-return sorting floor, and a paper-trading challenge scored for reasoning, not luck.
Enter cost, returns, and the fees everyone forgets to compute honest net-profit ROI — then watch the fee trap drag a 20% paper win back to reality. Toggle simple and annualized views across two classroom scenarios.