Business is a crucial activity in human life. Man earns his bread and butter through different business techniques. Moreover, Trading and Investing are the best forms of business in which people make money by utilizing different assets and methods.
Trading and investing are different approaches to the stock market. Trading refers to buying products and selling them immediately or within a short time. Investing refers to the utility of assets and earning from them for a very long time. However, there are many differences between Trading and Investing; let us discuss them.
What is Trading?
Trading is a short-term business activity in which a businessman buys a product and sells it immediately or within a short time. Trading is a risky process that can be severely affected by sudden fluctuations in the market. In addition, it allows people to trade different products for money or other goods, following things that can be sold, like stocks, bonds, currencies, interests, and other commodities. Moreover, it is the voluntary change of goods by earning short-term profit.
- Exchange of goods
- Short time interval
- Mobility of factors of production
- Simple transactions
- Easy process of business
What is Investing?
Investing refers to a process in which an investor invests his money or assets and earns profit for a long time. In short, we can say that investing is the Investment of assets and earning money from them over long periods. Investment can be made in the industry, stock market, bonds, or foreign currency. The main aim of investing is the generation of income for the Investor.
- Long run income
- Less risky
- Safe and Secure
- Sole income partner
Key Differences between Trading and Investing
- Trading is simply buying and selling products, while Investing is the long-term use of assets or money.
- Trading is short-term, while Investing refers to a long business process.
- Trading has a high risk, while Investment has a low risk.
- A trader does not own a product, while Investor may have the right to the product.
- Trader earns less profit as compared to the Investor.
- Trading does not require a specific setup while investing requires a proper business setup.
- Trading gives significant profit for a short duration, while Investment gives small gains for a long time.
Comparison Chart of Trading vs. Investing:
|It is a short-term activity||It is a long-term activity|
|Higher risk||Lower risk|
|No ownership rights||Ownership rights|
|Short-term income||Long term income|
In a nutshell, we can say that Trading and Investing are pretty different. They differ in terms of time, benefits, risks, rights, and many other aspects.