WHY SPECULATING IS NOT INVESTING
If you are like many people, you may think speculating and investing are the same thing. They're not! They are like chalk and cheese. Here's how to tell the difference.
SPECULATING is buying an asset in the hope that the price will go up and you will make a profit. There are no long term fundamentals behind the hype. It's based on hearsay or rumors and in most cases, it is just someone's opinion.
Speculating carries very high risk and is incredibly hard to do. It may be possible to make money speculating, but highly improbable. I put it in the same category as gambling. There's no evident track record of success over a long period of time.
The speculator can be a family member, friend or even a financial consultant. They will tell you about the next hottest fad or trend and will try and convince you to invest into something. They justify their point of view by giving an example of someone who has done very well financially out of this trend.
Be wary of these individuals! They will make all the promises up front but won't take any of the responsibly when you lose money.
INVESTING, on the other hand, is about making a profit using proven and time tested principles. It has a long and undeniable track record. Long term investing gets results.
The principles and strategies of successful investing are always the same and hardly ever change. Therefore investing is not based on some remote possibility, but on a high probability of success.
To become wealthy, you need to understand the difference between speculating and investing and avoid speculating at all costs.
If you find yourself crossing your fingers when buying an investment, in all likelihood you're speculating.