I have written an article about the difference between traders and investors. Now I will tell you which is best for you trading or Investing.
Here some Points about Investment and Trading:
1. Risk Factor
No doubt that the share market is risky. either you doing trading or investing both risky.but investing is less risky compare to trading. Investing only in long term profit. If an investor invested money in a good fundamental company then there will be a chance to get good compounding return from the stocks market. if a good company share price falls than you can stay with is a company without booking any loss.
Trading for short terms buys, selling process( or same day) .so in short terms bases if the share price falls that risky for traders.
2. Fees
Once buying stocks for long terms purposes that’s why investors paying fewer fees compare to traders.
Trading Has to pay more brokerages Because trading is all about buying and selling or selling and buying continuously. So every transaction traders have to pay fees.
3. Focus
We always trying to invest our life for a good career, good Education for the future. Similarly For Stock investment we focus on those companies, fundamentally strong, good track record companies, companies have the potential to grow. And we invested in those companies.
Trading aim is to generate wealth. Buying stocks, comodity, currency or any other instruments at low price and selling at high Price.
4. Value
For investment, investors looking for a value stock. Value stock means stock price trading at a lower price related to Companies fundamental, earning, dividend.
Doing Trading always looking for the Price of the stock because traders buying that base on news and want to sell as soon as possible.
5. Analysis
For Investing, Do fundamental analysis before buying stocks. fundamental analysis helps you to learn future growth potential, Companies information, Products, Customers, Balance sheet, etc, etc. It’s quite good for long term.
Traders do technical analysis before buying or selling any stocks. It helps traders to know previous price movements, Trading Volume, technical chart, indicators.
6. Return
An investor looking for compounding return. example: If You invest today $100 and yearly compounding return 25%. then after 20 Years later your investment amount will be $14098.15. This is the power of compounding returns.
1: $128.07
2: $164.02
3: $210.07
4: $269.04
5: $344.58
6: $441.31
7: $565.2
8: $723.87
9: $927.09
10: $1187.35
11: $1520.68
12: $1947.58
13: $2494.33
14: $3194.57
15: $4091.39
16: $5239.98
17: $6711.01
18: $8595
19: $11007.89
20: $14098.15
Trading Aim to earn money as soon as possible. example: if you have $100, You Brought a stock for a few days( or even the same days). If stock gain a 10% upside movement your total money will be $110 in a short period of time. This is a calculation if every day your profit is 10% then within 50 days your total money will be $14536.99. But this is only a calculation of trading because earning every 10% profit it next to impossible. maybe someday trader can lose their money if the trader is an expert in trading then he can manage the loss. For a new trader, it’s difficult to manage losses. bellow the calculation only a theory not practically can earn 10% for 50 days continue.
1 : $110.47
2 : $122.03
3 : $134.81
4 : $148.93
5 : $164.53
6 : $181.75
7 : $200.79
8 : $221.81
9 : $245.04
10: $270.7
11 : $299.05
12 : $330.36
13 : $364.95
14 : $403.17
15 : $445.39
16 : $492.03
17 : $543.55
18 : $600.46
19 : $663.34
20 : $732.8
21 : $809.54
22 : $894.31
23 : $987.95
24 : $1091.4
25 : $1205.69
26 : $1331.94
27 : $1471.41
28 : $1625.49
29 : $1795.7
30 : $1983.73
31 : $2191.46
32 : $2420.93
33 : $2674.44
34 : $2954.49
35 : $3263.86
36 : $3605.63
37 : $3983.19
38 : $4400.28
39 : $4861.05
40 : $5370.06
41 : $5932.38
42 : $6553.58
43 : $7239.82
44 : $7997.93
45 : $8835.41
46 : $9760.6
47 : $10782.66
48 : $11911.75
49 : $13159.06
50 : $14536.99
Which is more profitable trading or investing?
We are buying stocks at a low price and want to sell it at a higher price. But the question is who is more profitable?
If you are new at the stocks market then investing is profitable for you.you will learn the Share market Gradually. Investing for long term purposes so if anything happened to the market. you don’t have to book losses.
Trading aim to generate profit by buying, selling Shares over short term period.
Conclusion
In history, investors are more successful than traders. But Experience Traders can also make money from the share market. In my view, if you are new at the stock market then avoid trading. After the experience of investment, your thoughts will clear that you should do trading or not.
*Read Related Post For more information.