What is Better-Investing or Speculating?

By 10paisa.com

The most savvy and experienced of stock investors will not be entirely hesitation free in investing their hard earned money in something as inherently risky as stocks.  Even though the fact is that the chances of making a great deal of money through this kind of investment certainly exist, the thought  that one’s money can be lost as well , often overrides the instinct to go ahead and take the plunge.
We at 10Paisa.com favour the above approach, as it is our considered opinion that the only reason to invest in the stock market is to be fairly certain of the fact that one would end up creating wealth by doing so, albeit in the medium to long term. Anyone who invests merely on the hope that a good turn in the tide of fortune at the bourses will win them a windfall often ends up facing ruination.
The firs type of stock trader is the quintessential investor while the latter is a speculator. If you follow the first approach, you will invest wisely by spreading your risks. That can be done by way of allocating assets in a planned manner and building up a diverse portfolio of shares.
A speculator on the other hand will not really plan his or her moves and there will be no rational attempt to make one’s stock purchases safe from risky exposure. The idea is to somehow get lucky and be on the winning side, much like a gambler. Naturally such a person can really take very bad financial hits and the few good deals that they might end up with inadvertently from time to time will not amount to much.
Viewed technically of course all stock market trading is speculative, because no one can predict with 100% accuracy that a certain stock will provide good returns for sure. That being stated, one cannot let forego investment in the stock market, when there is enough empirical evidence to suggest that you can make judicious stock investment decisions which over time have a very high probability of helping you created wealth.
For instance, if you try the extremely conservative approach to stick investment, you are standing on a pretty sure wicket with regards to the growth strategy of the money invested by you in stocks. If on the other hand you invest in a haphazard and random fashion without referring to any kind of research you are merely tempting fate, rather than determining your fate. If that is the kind of speculative earning that you are looking at, then the Race Course, or a casino is the place that you should be visiting to see which way the wind blows.