Do you want your financial situation to be better? Have you heard about investing or trading in the stock market and are currently confused about which to choose? I can be sure the answer to the first question is a "yes" regardless of how "rich" or "poor" you might think you are. This article will explain any confusion you've got between trading and investing. This article will also point out why investing is the best option for anyone who wants to get make money via the stock market.
WHAT'S THE DIFFERENCE?
In the simplest of terms, the stock market is a collection of buyers and sellers of business equity. The stock market is a representation of ownership claims on businesses.
The two apparent games people play here are short and long. Trading is the short game. Trading stock involves buying stock when the value is low, with the expectation that it'll rise in a short period, and then selling it as soon as the selling price seems favorable.
The long game, on the other hand, is investing. Investing involves buying stocks in companies that make actual products and holding on to them for an extended period with the view that the business will grow and make a profit in time.
WHY YOU NEED TO PLAY THE LONG GAME
The first reason is that the short game is designed to make you the loser. The players in this game are either the armatures or the insiders with high resources. If you are not the latter, run away from the short game.
Another reason is that the main driver of profitability in the long game is growth in corporate earnings. Growth of corporate earnings will almost always happen in companies that make actual products. And as corporate earnings increase over time, the companies' stock values will rise, making you a winner.
The short game also means that you must carefully observe all tax rules. The trading specific stock might mean you'll be taxed way higher than expected. Tax rules could mean you'll make a net loss instead in the case of the long game; it is easier to monitor tax.
Asides from the noticeable financial gains you'll get for being a patient investor, you'll get peace of mind. Mental freedom to explore other financial avenues is prime in improving your financial status. You get the opportunity to do other things that make you happy rather than worrying over "will the price of this stock rise or drop in the next 2 minutes?"
Once you've identified the difference between the long and short game, it's easy to decide to play the long game because it's way easier to win this game. Trading carries many risks, and if you aren't an insider, ignore the short game. Choose the long game, have peace of mind, and become richer!