Investment vs Speculation
- Difference B/w Investment Speculation And Gambling
- Difference Between Investment Gambling And Speculation And Vacancy
- How Is Speculation Like Gambling
- Difference Between Investment Gambling And Speculation Bad
- Differentiate Between Investment Gambling And Speculation
In comparison to speculation, gambling has a high risk of losing the investment. For example, a gambler opts to play a game of American roulette instead of speculating in the stock market. The gambler only places his bets on single numbers. However, the payout is only 35 to 1, while the odds against him winning are 37 to 1. Nov 28, 2019 'Philip Carret, who wrote The Art of Speculation (1930), believed 'motive' was the test for determining the difference between investment and speculation. Carret connected the investor to the.
Speculation and investment are very similar to each other and carry a similar target of making profits. However, these two concepts differ from each other mainly by the level of risk tolerance. While a speculator takes a larger risk, he expects abnormal profits. An investor takes a moderate level of risk and expects satisfactory returns. The following article clearly explains the two concepts and provides a clear distinction between the two.
Investment
Investment in simple is referred to as monitory asset that is purchased with the hope that it would yield income in the future. Investments can be made in a number of forms depending on the investment return the investor requires and the risk that he is willing to take. Investments can be made through the purchase of an asset that is expected to appreciate in value in the future. Examples are the purchase of land, buildings, equipment and machinery.
Investors can also invest their funds in money markets using investment instruments such as bills, bonds, etc. The investment made by an individual depends on their risk appetite and the return that they expect. An investor with a lower risk tolerance may chose to invest in safe securities such as treasury bills and bonds which are very safe but have very low interest. Investors with a high risk tolerance may make risky investments in stock markets that yield higher rates of return.
Difference B/w Investment Speculation And Gambling
May 26, 2015 Whereas, investment and speculation can provide significant economic outcome. Gambling should be for fun: Normally rational people do gambling for fun and not for making money. So it is clear that gambling should be more done for fun and not for making money. Aug 26, 2017 The most important difference between investment and speculation is that in investment the decisions are taken on the basis of fundamental analysis, i.e. Performance of the company. On the other hand, in speculation decisions are based on hearsay, technical charts and market psychology. Investment advisors, wealth management, finance, education, investing, Equities, India, building wealth, intelligent investing.
Difference Between Investment Gambling And Speculation And Vacancy
Speculation
Speculation is the taking of higher risk and standing the possibility of losing all money invested. Speculation is similar to gambling and entails a very high risk that an investor may loose all his money or make very substantial returns if his speculation turns out to be correct. However, it must be noted that speculation is not exactly the same as gambling, because a speculator will take a calculated risk whereas gambling is more of a decision made on chance.
The motivation for an investor to speculate is the possibility of making substantial returns, even though they maybe at the risk of losing all. The following is an example for speculation. An investor decides to invest his funds in the stock market and notices the stock of company ABC is overpriced. In a speculative move, the investor will short sell the stock (short selling is where you borrow stock, sell it at a higher price and buy it back when the prices falls). Once the price falls the stock will be purchased at the lower price and effectively ‘returned’ to its holder. This move is an example of speculation that entails very high risk because if the stock actually increased in price the investor would have made a substantial loss.
Speculation and Investment
Speculation and investment are often times confused by many to be the same thing, even though they are quite different to each other in terms of the asset that is being invested in, the amount of risk taken, investment holding period and the expectations of the investor. The main similarity between investing and speculating is that, in both instances, the investor strives to make a profit and improve his financial returns.
How Is Speculation Like Gambling
The major difference between the two is the level of risk that is taken on. An investor tries to make satisfactory returns from funds invested by taking lower and moderate levels of risk. A speculator, on the other hand, takes a much larger amount of risk and makes investments that may yield abnormally large profits or equally large losses.
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Speculation vs Investment
- Speculation and investment are often times confused by many to be the same thing, even though they are quite different to each other in terms of the asset that is being invested in, the amount of risk taken, investment holding period and the expectations of the investor.
- Investment in simple is referred to as monitory asset that is purchased with the hope that it would yield income in the future.
- Speculation is the taking of higher risk and standing the possibility of losing all money invested. Speculation is similar to gambling and entails a very high risk that an investor may lose all his money or make very substantial returns if his speculation turns out to be correct.