When one wants to increase their wealth the two genres that pop up in the head is trading and investing. Many people have a misconception about the two terms. There find is really hard to understand the difference while many consider them to be the same.
The difference between the two has a very thin line. Both the terms are the medium to profit creation, however, the processes are different. Adam Jiwan is a well know investor from a young age.
The concept of trading
Trading means the buying and selling of stocks that are issued by the company. They also including buying and selling of bonds, futures options among the rest. The trading is done mainly on the selling and buying of stocks depending on the market among buyers and sellers. To be an effective trade one has o have a deep knowledge of the market.
The concept of investing
Investing simply means you put your money on an ongoing project or plan and to expect profit in the future when the company grows. An investor like Adam Jiwan can invest his money in stocks, mutual funds, bonds etc to get profit in the future. The income that he would get after a few years can be fixed or variable income depending on the shares and the medium.
The difference between trading and investment
The following points will clear your concept about the difference:
- Trading is the transfer of the financial product of companies from person to person for a price. The investment may be for a short term or long but completely depends on the market. On the other hand, investing is investing in various assets in there hope that they would create revenue and make profits.
- The time duration for trading is short, whereas that for investment is relatively higher than that of trading.
- In trading, the decision to put the money on the stock or not depends on the analysis of the past trading records. Whereas for investment has to look and analyze the business plan, project etc.
There is a very thin line between the two. The risk factor for trading is much more than that of the investment.