Trading and Investing may seem the same. Sure, trading and investing have some similarities. However, trading is different to investing in a few key ways. We’ll cover them here.
We’ve already talked about how keeping all the eggs at the same basket is a terrible idea, right? A good way not to do it is diversifying your money into trading and investing.
Now you say “w-wa-wait a second… weren’t these the same thing? you lend your money to someone and they pay you back with interests and stuff?”.
No, girl. Well, you were right when you said it is lending “your money to someone and they pay you back with interests and stuff”, but trading and investing have some crystal clear differences.
I’m here to shed some light upon this subject so that we can become richer faster – and licitly!
How trading and investing are similar
Of course, trading and investing are two ways people profit in the financial market, by buying stocks, shares, funds, etc.
So, the goal of trading and investing is quite the same: MAKING MONEY.
I know we usually tend to do the opposite, which is spending money on things like that lovely dress on sale, but we should stop doing that so much.
Our money can work for us, and possibly make us buy as many dresses as our heart desires in the long run!
The differences between trading and investing
The clearest differences between traders and investors are linked to time.
For example, if your dream for the future is to retire calmly with your beloved partner, making some trips and visiting your grandkids, you are a potential investor.
Investing is normal for those who are not in a rush, because you will have to be really patient to let your money in the same place, untouched, for 10, 20 or even 40 years.
Traders are the opposite; they buy shares for the purpose of selling them for more.
Sometimes they sell it in a few months, weeks, and even on the same day!
They have to be attentive to the opportunities because they always aim to sell their shares for a higher price than the buying price – and that’s how they profit.
The day trader is this person who buys and sells the shares in a period of 24 hours. This person is usually very dedicated and treats trading like a job.
Maybe if you’re unemployed, if you have a home office or are a stay-home mom who has some time for herself (although we know that being a stay-home mom is one of the most difficult jobs in the world), you could try day trading.
Is this case, you should learn how to start trading in 7 days by signing up for our free email course.
There is another difference between trading and investing, which is profit.
When you invest, your money will be there for a long time and profiting; it is safer, but it doesn’t earn that much.
Trading is more profitable if you can see the right opportunities. You can buy a company’s share, but something can happen to that company that lowers or raises the price of the share you bought.
In this case, trading may provide you some more profits than investing if you pay attention to the indexes and charts in the stock market.
If you don’t study enough, you might even lose money with trading – as for example if you buy a share of a company that will face bankruptcy in a short period of time and never recovers from it.
So, in trading, you have to be aware and never trade more than you can afford to lose.
Did you ever want to be able to help that company that makes your eco-friendly makeup?
Do you wish to be a part of something that will help many people with some product or service you think is good?
You can do that by investing! When we invest, we are helping a company to rise. We are a part of this company, and profit from its success and growth in value.
When you trade, you can’t be concerned about the principles or ideals of the companies – you might don’t even know their names!
Trading is all about seeing patterns and following the market because you won’t have time to invest in the companies you love – that sometimes can be in baby steps.
The different roles trading and investing can play
When building your wallet, you should have money distributed in investments and in trading market altogether – I won’t talk about the eggs and basket again, but that’s it.
Both have different roles in our wallet:
- Trading is for earning money in a short amount of time; Investing is for your retirement.,
- Your investments can make you earn a passive income – like when you invest in property funds, that pay you in each month. Your trading can provide you with active income (which can be handy if you discover you’re pregnant and you need some extra money NOW).
What is right for you?
- As said before, you got to have some time to trade – in day trading, for example, you have to spend at least 2 hours a day in the market, buying and analysing your shares’ prices.
- Do you want to get rich fast? You don’t want to wait until being a grandma to get the money? Then trading may be right for you! Check how to do it in here.
- Are you an aggressive trader or a lower risk investor? Make your choice based on your personality and goals.
- You always wished you earned some extra money every month without doing absolutely nothing? Then maybe these high return passive investments are a good fit for you
As we said, the ideal is that you find a balance between trading and investing. Many of us girls need some money ASAP, but we can’t only think on the present.
It doesn’t matter which one you think will be perfect for you. The most important thing is that you do something, no matter what!
Find out how to learn to start trading in 7 days signing-up for our free email course. It will help you find out if trading is that what you want.