Trading Vs Investment

 There is a famous quote which I recall every now and then, 'There is nobody who has become rich only by saving'.

You might wonder why I am saying this but there is a profound meaning to that phrase. The best way is to save as much as possible and let your savings grow eventually through compounding over a period of time. There is a reason why Mr. Buffet quotes that compounding is the 8th wonder of the world.

So now to answer the question why should someone go for trading or why should someone just invest in the market and let it grow.

Trading:

1. Trading is just like any other business and primary goal is to make money

2. It involves a complex learning curve, where in the initial time spent in understanding the market  dynamics and technical aspects almost has nil effect

3.Based on the type of trading(will cover in a separate blog)- time spent will vary proportionately and requires active involvement

4. Requires not so much capital(investment) 

5. Highly stressful and winning ratio is proportionate to the mindset and rigid discipline

Investment:

1. Unlike trading, Investment is purely for wealth creation

2. Doesn't require much of technical skills and a decent ability in understanding the financial fundamentals of a company is enough

3. Time spent apart from the initial study is almost nil

4. Requires a decent capital to see the effects in absolute money terms

5. Success factor is determined hugely on how long one is invested 

Summary: 

I would like to recall the first phrase with which I started this blog, the power of compounding. It can be achieved only through investment and not by trading. Hence, trading is purely for developing the capital and investment is for growing that capital.