A lot of people have a misconception between investing and speculation. Many thought that both are one and the same. But that is not actually true.
What is speculation?
- An act of conducting a risky financial transaction, in hope of a substantial profit
- Based on hearsay, technical charts and market psychology.
- Short term, less than 3 months
- High risk involved
- Intent to profit with the changes in prices
- Looking for a high rate of return
What is investing?
- Purchase of an asset with the hope of getting returns
- Based on fundamental factors, such as the performance of the company
- The investment is for longer-term, such as 10 to 30 years
- Moderate risk involved
- Intent to profit with the changes in value
- Looking for a modest rate of return in the long run
So, when we really compare to both of the above, we could see that there are significant differences. And if you ask me, I would prefer real investing instead of speculation.
No comments:
Post a Comment