We all know how stocks and bonds work. And a lot of investors, whether they own them or not, rely on that for their investment income. The difference between investing and speculating is that investors aren’t just gambling on an outcome, but on the possibility of it happening.
You might be saying, “Well, I just bought this stock and it’s up 90 percent!” or “I’m speculating on a hot stock right now and it’s going to go up 30 percent!” Well, when you buy a stock, you’re gambling that the market is going to go up. When you invest in stocks, you’re betting on the future.
Investing means that you bet on a potential outcome. Speculating means that you bet on a probability. People with real money tend to use the latter. Speculators don’t invest in stocks because they believe that they will never get the money back. They do it because they believe it will pay off in the future. There is a difference. Speculators put more money into a stock than most people do, but they don’t make money any more than an investor does.
If youre invested in a stock, then you know the odds are that the stock will increase in value. You dont know the odds of a stock to go down. If you think a stock will go down, you dont invest. You invest because you think of the future. You dont invest because you think of the past.
Speculators are not like real traders. They dont have a firm concept of how the market works, how a stock might do, or anything else. They just take a big gamble on a stock and hope that it will go up.
Speculators are a different type of investor from real traders. Real traders are investors who have a firm concept of how the market works, how a stock might do, or anything else. They know how stock prices have changed over time, what the expected return is, and how the market reacts to that change. Speculators are not like that. It is difficult to say what is “possible” in the world of speculation.
A person who is an investor, then, is someone who is aware of the risks associated with investment. This is how a person who is an investor can be said to be “wealthy.” Wealthy people are people who have money, but they don’t spend their money buying things they don’t really need. They still have it, in the form of investments. Speculators are not “wealthy.
The money that people make is not just the money that they spend. Speculators also make money from the time they put in, but that is, in effect, speculation. That is, they make a profit from an idea so that they can spend the money on more money. This is not a good thing. Speculators should do nothing but spend money.
Money is a fundamental element of life. Money is a product of people. If you dont invest the money you have, you cant have a good return. If you dont speculate your money is gone.
Investors, on the other hand, are people who try to invest in something that they believe will grow into a great asset and make money. They invest because they feel that they can make a great return. Speculators are people who make money from something that is not a good investment, like a bad idea. They speculate because they think that they can make a great return.