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Stock Market Trading VS Investing



investing-for-long-term

I have always asked few people, “Why don’t you invest in the stock market? You already saw me earning!” Yet quite a few shook their heads and some even answered in deep silence. Some said it’s too hassle monitoring the stock prices, perfect timing for buying and selling and little profit. They’re missing the point!

Risk

We know for sure that stock market is a high-risk investment. Yes I strongly agree. And I also believe that it’s the cramping factor of people not investing to it. But risk can be reduced (even eliminated) with simple methods. (You can read it on my blog post - Top 5 Ways to Reduce Risk in Stock Market) So stay connected and subscribe to my RSS feeds.

The Difference of Investing vs Trading

Easily defined, investing is using of resources to profit in the future. This may not be the definition on Webster or Wikipedia but I will define it in a bite-size, easy to understand manner.

Thus, to invest is to outlay or spend something with the goal of earning more than what is spent. Now this sounds business. In stock market, it is buying stocks at a particular time and selling it after SEVERAL years. Long years in such a way to realize a GOLIATH and massive profit from your stocks.

Too long? Well then, stock market is not meant to be your main income but a “retirement” fund.

To blunt, investing means reaping the fruit after sowing the seeds, watering the shrub and applying fertilizers. It is no shortcut. No get-rich-quick scheme. No rocket science. It is a conservative way.

Therefore, what is RISK then? On the other hand, stock market trading is a short deal of buying & selling stocks. Meaning, to trade is more or like speculate in the stock market: buying a low-priced stock with the anticipation that it will rise next week! Do you see the difference?

                        Risk                Term               Good for
Investing       Low                  Long                  Retirement
Trading         High                 Short                 Immediate income 

Now it is already clear what sets investing apart from trading. For all of you who read this, good for you. You are at least ahead of anyone else. You may post this to Facebook or email to a friend.

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