Trading Vs Investing

Those people who want to earn money in the market and want to know whether they should invest or trade in the stock market. You must have heard from many people that nothing is better than a long-term investment. You see Warren Buffet, made so much money from investments that he has come to the list of the people.

Then many people will say that money will be made in the long term after 5 years, 10 years, and 15 We will keep doing SIP, we will keep investing in mutual funds, we will keep investing in stocks. I don't know when it will increase. What is better than this is that we do trading. We will make money every day. Who then has the upper hand? What should you do?

First Investors

Now, people who invest, also make a lot of mistakes. And they don't know what happens. People think that we have to invest in the stock market. Investment is safe. Many people say that you have to invest. In the long term, both the human and the share market have to go up. And the concept of investment is also very simple. Today we are buying at any price. We are putting money in a share or mutual fund. We are doing SIP.

If the market goes up and the stock performs well, then we will get good returns. Our money will increase. But then some people make mistakes. They invest in stocks. And then they also hold such stocks. Which stocks are giving negative returns? 

I have seen it in many people's portfolios. That they have invested in 10, 15, 20 stocks. And many such stocks are underperforming. You see that they are standing at a loss of 30%. 30% of their portfolio is down. Still, what are they thinking? I am a long-term investor. The market has to go up in the long term. And I am also saying this. It is possible that tomorrow this negative return. Perform well with 2 or 3 stocks. And bring this negative into a positive. But then the question will come. And most of the people's portfolios can't even beat Nifty. 

And that's why many people say that mutual fund investments are very good. And then the question comes in mutual funds. Did you invest in active or passive? And even if they don't beat the benchmark. The biggest problem in investment is this. People invest in stocks. And invest in such stocks. In which there is a negative return. And then they hold them. They say that we are long-term investors.

Mistake

They will invest in stocks. If the stocks give good returns, they will sell them. If you hold stocks for less than a year. Then the first thing you will get more tax. Because here people forget the tax. Short-term and long-term capital gain tax. When you buy and sell stocks for less than a year. Then your tax increases. And here people completely underestimate this thing. The one who had given profit sold that stock. And the stock that is giving loss, he is holding it. So the portfolio will never go up. Now this is a mistake of investors.

Second Traders

I will give you an example of traders. You will google. One of the most successful traders in the world will come. Jesse Livermore. In the market, he engaged in short selling.

What is short selling?

Traders can earn money by increasing the market. You can also earn money by falling in the market. Jesse Livermore was a short seller. He used to bet on the fall of the market. In 1929, there was a crash in the US stock market. And in that, he made 100 million dollars. If you say, it will be a very big amount. And at that time, it was amazing. 

That's why he still comes in the list of the most successful traders in the world. But he made so much money in 1929. In 1940, he shot himself at 5.30 p.m. in the Sherry Netherland Hotel, in Manhattan. After making so much money, After making money from trading.

Why did he shoot himself?

He left a suicide note for his wife. And in that, he wrote that I could not bear so much pressure. And he mentioned one thing. You can google it yourself. He said that I did not follow the rules of trading. That money is made by trading. But even such a successful person, If he does not follow the rules of trading, Then he can become a big failure. 

He can lose everything. So money is made in trading. And money goes into trading. That's why SEBI gives you a warning. Whenever you log in to your Demat account. In this segment, when people talk about trading, They trade in FNO. Futures and Options. And in Futures and Options, 9 out of 10 people are losing. But then there are many optimistic people. They say that 9 out of 10 people are losing. It looks like a loss of 50,000. So people think that if a loss of 4.5 lakhs, There are such calculations of people. They do not follow Jim Simmons, Who is a successful trader. 

They say that if a person loses money from someone's pocket, Then the stock market will not keep money in its pocket. If money comes out of someone's pocket, It goes to someone's pocket. If 9 people have lost money, Then one person has earned a lot. I will become this one person. The point here is that There is a high probability of loss in trading. And if the rules of trading are not followed, There may be a loss. Even then people do not understand. Whether you want to trade or invest.