Just want to share stock investing versus trading! Should you invest or trade stocks? In stock market investing you only need small amount of money or large amount of money if you want. There is a big difference between trading and investing in the stock market. First, we have to study trading and investing afterwards.Joey is an investor, a 25 years old investor. He works in a company as a sales manager earning about $2,000 per month. While John is a trader. He works in a company as a supervisor earning about $1,000 per month.
They both have investment capital amounting to $5,000 as their savings. They decide to invest and trade their money in the stock market. Who will become more financially successful after many years?
Okay, Joey invest $5,000 and his stocks is earning 12% per year. After 20 years his money turned into $48,000. While on the other hand, John is a trader, he keeps on trading stocks and he maintained to earn an average of 25% every year. His money turned into $433,680.
Related: Mutual Funds Vs. Stock Market Investing
Stock Investing Versus Trading
Stock Investing – simply means the activity wherein you are not guessing or speculating on what stocks to buy. You have a specific rules to follow in your investing. You analyze, you study, research and investigate on which company stocks you should buy.
Stock Trading – you will buy stocks today and sell it after few minutes or few hours.
They are both profitable, however stock trading is riskier. They both need analysis, so that the investors will make a profit.
In our example, maybe you think John the trader wins in the long run. But in the real world, the ones who invest wisely and patiently wait is the one who wins financially. If you want to achieve financial freedom, invest in stocks not trade. That statement has “exemption”, you can trade your money if you want but make sure do it for small amount of capital and when you’re expert you can trade stocks with large amount of money.