What is the difference between investing and trading?

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Both terms could actually be defined very broadly, and I am sure financial professionals could come up with many differences between the two. Here are the basics in my view.

Investing is the act of owning something, it could be an individual stock, a mutual fund, a property, or anything else you feel has less value today than you think it will in the future. Trading is the actual transaction that occurs when you buy or sell investments. If you are an investor, typically it means you are a person who is holding on to something for the purpose of earning a profit when the value increases. If you are a trader, then you are the person creating transactions. You are buying or selling the investments for yourself or others. Traders could be viewed as attempting to take advantage of short term market swings, while investors could be said to take a more long term approach.

Hope that defines it for you. Happy investing. . .or should I say trading? Your choice.

 

Wyatt A. Moerdyk, AIF®

Managing Member

Chief Compliance Officer

Accredited Investment Fiduciary®

10004 Johns Road

Boerne, TX 78006

Office: 210-591-1170

Email: wyatt@evidenceadvisors.com

Web: www.evidenceadvisors.com

Investment Advisory Services offered through Evidence Advisors, LLC, a registered investment advisor. Investopedia, LLC and Evidence Advisors, LLC are not affiliated.

 

 

September 2012
23 hours ago