Trading vs investing is most sensible topic because people don’t understand their real meaning. Some one say trading is just a gambling ? investment need time and i don’t invest and wait for years ? i want to become rich quick these are the questions they say when anyone ask them about investment vs trading which one is better ?
What is Investing in Stock Market ?
Investment is a process in which we buy shares of any company and give money to businesses to grow further and take equity from owner.
Investing involves putting your money to work by buying assets — such as stocks or bonds — to generate profits (often called returns) beyond your initial investment. When speaking about investing, people often refer to financial markets where investors connect to buy and sell assets, such as stocks or bonds.
What is Trading In Stock Market ?
Trading is the buying and selling of securities, such as stocks, bonds, currencies and commodities, as opposed to investing, which suggests a buy-and-hold strategy. Trading success depends on a trader’s ability to be profitable over time.
The basic fundamental of trading is to buy when the price is low and sell when the price is high, but there are several other strategies such as reverse trading and short-selling, which only seasoned traders use to make high profits in the short term. Such strategies are risky and not recommended for beginners.
Trading Vs Investing Major Differences ?
Trading is buy and selling stock quickly while investing is for decades. Here are some major differences between both.
Time Apporach
Investing is for decades means we buy shares and sold only when company performance was bad but in trading we need to sell fast because when we don’t sell quick then our loss wider and we are in huge losses.
Risk of Loss
In investing risk is limited because when we buy shares at 100 then risk is only 100 rupees but that’s not happen in reality because this is worst senario.
But on the other hand in trading risk is very high because we can’t predict when stock will go high or low but still people hope and loss money in trading.
Tax Rules
In Investing tax only applicable above one lakhs and this is only 10% of total profits.
In trading tax is 15% and no tax benefits. Trading is zero sum game one earns because second one take loss.
Trading Vs Investing Final Decision
Learn trading basics because they helps us to understand when to buy and sell stocks no fundamental analysis told about it. Only technical analysis help to understand where market go in short term and apply it to investing because investing for long term creates huge wealths.
Who makes money in trading, only 10% makes money other loss because of zero sum game, trading costs,etc. In investing there are many gurus who makes money like warren buffet, rakesh sir, vijay kedia, etc but in trading no one is.
Trading vs Investing : is trading gambling ?
No, trading is not gambling, because traders provide liquidity in markets without traders investors can’t buy stocks.
Investment need time and i don’t invest and wait for years ?
Yes, investing takes time but give returns in crores but trading can’t give huge returns like investments. Think we buy gold and real estate we don’t sell them at second day we still hold when price go down.
Also Read :- How to start investing with small capital in stock market ?