Trading vs Investing

What is Trading?

Trading refers to the dealing with bonds, i.e.agreements, futures, options, buying and selling of shares, debentures, etc., between merchants, for the intention of obtaining a profit. In the stock exchange, the money is transferred by the purchaser to the seller, to transfer the stock, who give their consent on a specific cost price. For efficient dealing, the stock dealer must have a solid education of market aims and how it works.

What is Investing?

Investing can be defined as the method of placing down a definite aggregate of money, in a plan or scheme, project, to produce profit or income out of it in prospect. Investing objects at gathering money, by saving it aside, to spend it on multiple investment avenues, in the anticipation of gaining more money.

This article is a ready reckoner for all the students to learn the Difference between Trading and Investing.

Basis

Trading

Investing

Meaning

Trading refers to the trading of securities, i.e. bonds, buying and selling of shares, futures, options, debentures, etc., between merchants, for the intention of obtaining a profit.

Investing refers to distributing money to either a project, policy, plan or a scheme which is capable of generating future returns.

Term

Short to medium

Medium to long

Tool

Technical analysis

Fundamental analysis

Associated to

Day to day market trend

Long term profitability

Risk involved

High

Low

Taxation

Short term capital gain

Subject to the investment is held for more than a year, though it is not taxable.

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