Value-based investment and trading on shares are two different art of making profits. The art differs in the mode of operation and the perspective towards shares and financial outcomes.
Focusing on the trends and buying shares in one way, keeping away from the trends, and invest in equal proportions in various shares is another way. The parallel methodology does intersect only one point in time, is while buying the shares.
The financial goal is to watch out for the potential rise in the value of the shares. Keeping it long term or selling the shares at the right time fetches equally good financial returns. It all depends on how a person looks at investing and buying shares. They both are similar in purchasing stock, the aftermath has a difference in it.
Wealth creation in the equity market revolves around these two actions. The approaches are quite different from each other, but the objective is the same, financial freedom.
Is it quick money? or long term nurture makes a whole lot of difference. The differences of approach lie in the methodology of operation and strategies used to think about the next action plan.
Investing vs Buying Shares
The main difference between investing and buying shares is that Investing happens after thorough market research of the movement of the share
in the past, the track record of the company, and buying the shares stocking it for a longer period aiming at higher financial benefits later. Buying shares is a simple activity to watch out for the trend, look out for the stable company’s share price, and purchase it, to keep it for a relatively shorter period.
Comparison Table Between Investing and Buying Shares (in Tabular Form)
| Parameter of Comparison | Investing | Buying Shares |
|---|---|---|
| Meaning/Definition | Investing is buying shares and stocking it for a longer period aiming at higher returns at a later point in time. | Buying shares is a simple activity of share purchase when the price goes down to sell it once the price goes up. |
| Goal | Investing is to steadily build wealth over some time by buying and holding the shares for a longer period. | The goal is to purchase stock at a lower price to sell it at a higher price later for short term gains. |
| Belief System | The company will perform to its best in the future and the returns can be received as dividends. | The shares shall move up at price in the next few days. |
| Profit and Period | The profits are reinvested on shares to make additional stocks. Generally, the period of holding the stocks is longer. | The profit is made by purchasing the shares at a cheap price and simultaneously selling at a higher price at the tight time. The period of hold is very limited. |
| Strategy and Tools used | The strategy is, buy to hold. Market forecasts are learned systematically and continuous watch on price and earnings ratio establishes success. | The strategy is, buy to sell. Technical analysis of the shares is made like moving averages and watching out for oscillators to identify the right time to purchase or to sell shares. |
What is Investment?
Investing is a financial strategy to buy and hold shares for a longer period aiming at earning interest and also to reinvest in additional stocks.
Market movement and participation, in the long run, is the way the investors look for profit, investing makes larger profits over some time through buying and holding.
Investment is a long term approach that requires a thorough market analysis of the company’s trend. Investors easily ride out short term losses and aim at holding for a longer period for high returns.
The primary objective of investing is to build wealth gradually over some time by holding a portfolio of stocks, investment bonds mutual funds, and baskets of stocks. Investments naturally extend over a decade aiming at the interest received as dividends at a later point in time.
Investors do not worry about market fluctuations. They carefully watch for the price-earnings ratio and market fundamentals.
Investors look at creating steady wealth by gradually investing and reinvesting on the stocks so the market fluctuations do not matter to them when there is consistent wealth development.
This involves very low-risk factors and the annual interest earned is close to 15%. This is way too higher than the traders who make a monthly turnover of 10%. The art of compounding interest comes to rescue long-term investments. It is not only higher in returns but also secured.
What is Buying of Shares?
It is a simple activity of purchasing the shares while the prices are down. The main aim of buying the shares is to wait for the right time to sell the same when the prices go high.
The process of buying shares is done regularly. The main objective is to make a profit in the short term and no investment thoughts arise.
While investing in shares gives high returns in the long run, buying shares and selling it at the time right time gives good returns too.
The technical analysis of stocks is to be watched out for. This makes the buyer ascertain which shares that he will be buying that particular period.
The oscillations and share movements are the right moments to approach for a purchase. Market fluctuations are the ripe moments for the buyers.
The belief the buyers have is that the price of the share shall rise in the future. And once it does, selling the stock to purchase new ones at a lower price.
Generally buying shares is an activity does not have any intention of holding the shares. Buying and keeping the shares for a shorter period can offer them a return of 10% every month.
Main Differences Between Investing and Buying Shares
- The main difference between investing and buying shares is, Investing in shares happens after thorough market research of the movement of the shares in the past, the track record of the company, and buying the shares stocking it for a longer period aiming at higher financial benefits later. Buying shares is a simple activity to watch out for the trend, look out for the stable company’s share price, and purchase it, to keep it for a relatively shorter period.
- The goal of the investor is to consistently develop wealth through careful investment and reinvestment on the shares. The goal of buying shares is to wait for the moment when the price of the share goes high so that it can be sold.
- The general belief the investors have is, the company shall perform well in the longer period which may offer returns as dividends while the buyer shall believe in the market movement and share price hike.
- Generally, investments are like retirement plans, it goes for decades and the profit is reinvested in getting additional stocks. Buying shares shall ensure profit when sold at a higher price and typically these are short term affairs.
- The strategy of investing is to buy to hold, while the strategy of buying is, buy to sell.
Conclusion
Wealth management is of vital importance for better wellbeing. People may have different strategies for making wealth. Ultimately financial independence is what people are aiming at.
It can happen through adventurous short-term gain or relaxed long-term gain. Buying shares is not a one-time event, the person must watch out for the correct tide to sail through with the sale too. Comparing the returns in each case does not show any difference, in fact investing has more return percentage.
The market fluctuates, one person is not worried and another spring into action. Stock exchanges have many emotions shared than the hospitals as gain or a loss is just available in front.
References
- https://ideas.repec.org/a/fip/fedaer/y1995ijanp1-12nv.80no.1.html
- https://www.clutejournals.com/index.php/IBER/article/view/4226