Passive investing is like building a ginger bread house. First it is a sweet and beautiful harmonious selection of treats which work well together in order to build your financial house. But second, it is equally as important to know what not to use in your construction materials.

This issue is about what to ignore and avoid putting in your Carnival of Passive Investing – Gingerbread House Edition.

Cheryl Krueger presents Actively managed vs. indexed mutual funds posted at Growing Fortunes Financial Partners. She reviews a webinar by Rick Ferri, author of “The Power of Passive Investing: More Wealth with Less Work.” She reviews why to avoid 2 types of active management – active management through using actively managed mutual funds, and active management through tactical allocation (a.k.a., market timing).

Dividend Growth Investor reminds us in Why I am not worried about the Fiscal Cliff and Dividend Tax Increases that all the short-term forecasting noise from the news pundits can be ignored. Dividend paying stocks won’t suddenly be worthless just because dividends are being taxed at a higher rate in the taxable accounts of those with higher incomes.

Michael Kitces presents What’s The Real Value Of Deferring Capital Gains? Less Than Most People Think… posted at Nerd’s Eye View provides wisdom on when the opportunity to realize capital gains is (was!) worth taking. For those of you too passive to worry about capital gains tax rate changes if you wait long enough before taking action it will have been the right decision.

Vipin at The Investing Monk reminds us Not to fall for get rich quick scams. They are like frosted covered cardboard. If their tips really made money they would keep them to themselves and make crores of money. (Don’t be embarrassed, I had to look crores up too.) The key is learning that nearly all active management schemes are frosted covered cardboard. Passive investing includes learning what to ignore.

Finally, Jacob at My Personal Finance Journey reminds us in Seven Simple Tips For Smart Investing to keep it simple, diversify your portfolio, don’t chase results, and choose low fee investments.

Submit your own entry to the Carnival of Passive Investing.