Trading Vs Investing

Which is better for long-term goals?


People chase their financial goals by investing money in real estate, FDs, Gold & more popularly stock market in the recent times. Trading and Investing are two such ways to grow your money in the stock market.

What is Investing in the Stock Market?

Investing is buying shares of companies that have potential to grow. Your investment grows when share prices go up. Additional benefits like dividends make it even more attractive. Potential is sky high if done patiently.

What is Trading in the Stock Market?

Trading means taking positions on stocks for shorter periods (minutes, hours, days etc.,). Traders analyse if stock prices will go up or down and basis analysis, they have the liberty to put money on either side. Whether the market goes up or down, a trader has an opportunity to make money either way.

Pros of Investing 1. Steady growth with lesser risks

2. High return potential in a growing economy like India

3. Requires less effort in tracking and researching 4. Variety of options to diversify and balance out risks 5. Easy process and sufficient expert guidance

Cons of Investing 1. Investors can only profit if the market is going up

2. Ideal for long-term and requires years before you can book profits

3. Capital is blocked for long periods 4. Choosing right stocks is critical. Stocks with low liquidity can be volatile

Pros of Trading 1. Trading can be profitable even if the market is going down

2. Leverage allows traders to book more profit by investing less capital

3. Ideal for short-term gains. Traders capitalize on news, updates, and sentiments 4. Capital is not blocked for long periods

Cons of Trading 1. Trading is riskier due to its time horizon and volatile nature of the markets

2. Leverage is a two-edged sword, can cause severe losses if not handled well

3. Requires more time and effort in choosing stocks 4. Charges can be high based on frequency

Who Should Trade?

Someone who has good knowledge, analytical approach, calm head, and more time to dedicate should choose trading. Who Should Invest?

Investing is for everyone. If you are a beginner and want to grow your money at a steady pace, investing is for you. Lower risks, and less effort make it easier.

Investing and Trading is simple on Bajaj Securities

BFSL Offers Low Fees, Quality Advice, Diverse Options and Secure Platform for both investors and traders.

Download Bajaj Securities App on PlayStore and AppStore