Description
Transcript
Trading… Investing… Trading… Investing…
What’s the difference anyway?
Generally speaking, investing is for the long-term, while trading is for the short-term.
As an investor, you typically have a longer term outlook on your investment, and you can hold your assets for a period of years at a time.
As a trader, however, typically your focus is much, much shorter, and you might hold your assets from anywhere between a couple of minutes to a few days, depending on your trading style.
Now let’s dive a little deeper into both approaches.
Investing can be split into two: Passive investing and active investing.
Passive investing is where investors have the goal of simply matching the performance of a market or a benchmark index over time.
Take the S&P 500 as an example which on average makes gains of 11% a year. Passive investors may choose to invest in an ETF that tracks its performance. This means you could also potentially make an average of 11% a year. Just remember, past performance is not an indication of future results
Whereas for active investing, investors actively buy and sell assets in their portfolio with the aim of outperforming an investment index benchmark over time.
This typically requires active investors to be… well, active –
By analysing companies and finding the right ones that may help to outperform the market.
Trading, however, is more about the chance of creating higher profits in shorter time frames and in all types of markets (including bearish).
It’s a more technical approach, with less importance to the specific assets you are trading.
Now, time wise, being a trader is like being an active investor – but in a much more frequent way. When it comes to trading it is imperative to note that you will most likely need more time to master it.
So whatever style you pick, we have a lot more information waiting for you in our next videos, so hang tight and see you there.