Recognize the Difference Stock vs Investment. Some people, generally they are still new to the world of stocks and investments, some think that the two terms (stock investment and stock trading) are the same or there is no difference at all.
This assumption is wrong (inappropriate), because both have significant differences, both in terms of concepts, risks, and the flow/strategy that is carried out. If you are still curious to know more about stocks and investments, follow some of the following interesting reviews:
The first difference is in terms of the basic concept between stock investment and stock trading. Stock investment prioritizes / emphasizes the purchase of shares so that they are kept back for a long period of time.
Recognize the Difference Stock vs Investment
In the long term, you will have the opportunity to earn up to 2 times the amount of money invested. While stock trading is the antonym of stock investment alias inversely proportional.
Users are required to buy shares and resell them immediately when the price is soaring (up). You must be shrewd and careful in calculating and be able to determine when the best time is, selling or releasing the shares you have bought in order to get abundant profits
Level of risk
From the level of risk, generally there must be between stock investment and stock trading. The terms in stock investment, in this case, are capital loss risk and liquidation risk. The risk of capital loss occurs when the assets or shares owned (purchased) are of lower value at the time of resale.
Liquidity risk is the risk that occurs when a company is declared bankrupt or bankrupt by a court or company.
The risk of trading stocks can be said to be quite high because traders cannot keep stocks for a long time.
Remember, market movements are unpredictable, you can buy high value stocks at that time (today) because prices are falling and are predicted to increase.
Recognize the Difference Stock vs Investment
Even unexpectedly, sometimes the political situation or the global economic system changes, resulting in a decline in stock prices
Stock vs Investment Difference
Purchases of shares purchased from stock investments and stock trading also have differences. For those of you who want to invest in stocks, you can buy layered stocks, such as the term first-tier stocks or known as blue chips. This stock method is very suitable for you beginners because the level of risk is relatively low.
In contrast to stock trading in general, the shares to be purchased tend to be in the second or third layer of stocks. If the market conditions are good, the price will soar in a matter of 1×24 hours (one day). Another alternative is to choose shares that are included in the Initial Public Offer (IPO)
The next difference between stock investing and stock trading lies in the strategy used. In general, the difference can be seen in the following points:
Stock Investment Strategy
Stock Investment Strategy is usually done by investors. The stock strategy is to pay attention to the supporting factors that affect stock movements.
Usually, investors understand and don’t care about price fluctuations. While the stock investment strategy is to buy shares of issuers that have healthy work performance/quality and have strong fundamentals.
Investors tend to choose strong companies such as banks. The selection of this method is based on profits and dividend distribution within a certain period of time
Stock Trading Strategy
This Stock Trading Strategy is usually carried out by traders who prioritize strategy patterns, based on market movements and conditions than the shares purchased. For example, when the stock market declines due to global economic and political factors, traders will not rush to enter the stock market until the situation and conditions recover (normal).
Furthermore, traders emphasize targeted strategies. They will not hold their trading positions for long enough. This strategy is carried out based on profit targets, stop losses, to the level of the risk-reward ratio.
Up to you
The last point after you understand the explanation above about the difference between stock investment and stock trading, now it’s up to you. Would you like to dive into the world of Stocks or Investments? Actually, both systems have their own advantages. In fact, both can also be said to be able to provide benefits for your future.
That’s our brief explanation of the Difference in Stocks vs Investments. Thank you for reading our article. Hope it is useful.