The Difference Between Investing and Speculating (and Why It Matters) - Deepstash
The Difference Between Investing and Speculating (and Why It Matters)

The Difference Between Investing and Speculating (and Why It Matters)

Curated from: lifehacker.com

Ideas, facts & insights covering these topics:

8 ideas

·

962 reads

Explore the World's Best Ideas

Join today and uncover 100+ curated journeys from 50+ topics. Unlock access to our mobile app with extensive features.

Investing and Speculating

Investing and Speculating

  • Difference between investing and speculation is a matter of risk tolerance, with speculation being closer to gambling.
  • The truth is that there’s no clear cut line between them, as all investing carries risk.
  • Still, there are differences worth knowing about, no matter what your financial goals might be.

19

489 reads

Investing is a long-term play

Investing is a long-term play

  • Investing is most commonly thought of as an attempt to profit on transactions, stocks, or assets.
  • Often, there is a “safety first” approach, as the most conservative-minded investors will trade off higher returns in exchange for reduced risk.
  • Safe investments can include bonds, buying property, loans to low-risk borrowers, or investing in blue-chip stocks.

18

77 reads

Passive Investing

Passive Investing

  • To ensure the highest margin of safety, choose an investment that gives consistent returns.
  • The most conservative investor will avoid short-term market volatility by investing in assets over the long-term, often decades, called “passive” investing
  • This strategy has performed well for investors like Warren Buffett.
  • The longer the money is invested, the more it will compound, making it less susceptible to short-term, double-digit dips in the market.

21

105 reads

Warren buffett

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

WARREN BUFFETT

20

81 reads

Speculation is focused on short-term gains

Speculation is focused on short-term gains

  • Speculation follows the saying: “With great risk comes great reward”
  • Speculation is the act of putting money into investments that have a higher probability of failure, while also sometimes paying off with a big reward.
  • Speculators tend to trade more frequently, and they’ll wager on higher-risk markets such as commodities, cryptocurrencies, or in shares of small or distressed companies.

18

52 reads

Speculation is not Gambling

Speculation is not Gambling

  • Just because speculation carries a higher risk doesn’t mean it’s all gambling, however.
  • The same level of scrutiny and research that’s applied in long-term investments can be applied to short term cycles and market behaviour.
  • However, when people make trades based on zero knowledge of what they’re investing in (like cryptooften times), then it’s basically gambling.

18

43 reads

Risk is a spectrum

Risk is a spectrum

  • The difference between investing or speculating, is not about what you buy, but why you buy—and that varies for people based on their financial goals.
  • For example, a low-income earner near retirement won’t want to chase a short-term upswing. In contrast, someone with more wealth might want to reduce their exposure to just stocks or bonds, so they might be happy investing a small portion of that wealth in high-risk intangible assets like crypto.

19

41 reads

Know your risk appetite

Know your risk appetite

  • Know the difference between low-risk and high-risk investments.
  • Knowing your own risk tolerance.
  • Your risk tolerance depends on your age, financial status, and retirement goals
  • Consider consulting with a financial advisor to walk you through the trade-offs that come with investing and speculating. 

18

74 reads

IDEAS CURATED BY

srividyag

A techie-psychologist-poet. You can buy my book from the link:

srividya g's ideas are part of this journey:

Harnessing Blockchain Technology

Learn more about moneyandinvestments with this collection

Understanding the basics of blockchain technology

The benefits and challenges of using blockchain

The future of blockchain technology

Related collections

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Personalized microlearning

100+ Learning Journeys

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

Email

I agree to receive email updates