What is difference between investing and trading?

 Trading and Investing

Once when Warren Buffett was asked why people don't copy his simple investing strategy and become rich, he replied, "Nobody wants to get rich slowly." Investing is something that takes time to build wealth. Even billionaires like Warren Buffett and Charlie Munger became rich in their 50s, and most investors become wealthy in their 50s or 60s. That's why beginners in the stock market often venture into the world of trading. Both investing and trading can help you make money, but they require knowledge, risk management, time, and goals.

What is investing?

In investing, money is put into stocks for the long term, such as (10, 20, or more) years, with higher chances of growth in a particular company, business, or the overall market.

Here is the chart of Nifty, and you can see that in the long term, like 5 or 10 years, Nifty has never given negative returns, even if there was a market crash in between.

You can also look at the chart of Sensex. Sensex has never given negative returns in the long term. Investing is a highly analyzed and calculated investment. With confidence in compounding, you can become wealthy. However, when you invest, it takes time for your money to grow. You have to refrain from spending your money in your young age, save it, and invest it. You need to eliminate your liabilities.

What is trading?

In trading, you engage in short-term investments. If you follow all your strategies and principles and trade, you can become rich in just 2 or 3 years by buying low and selling high.

Trading involves investing money for a short period of time. It requires knowledge of a company's price and market news. Trading involves many predictions, which make it riskier. Even with all the expert traders in the stock market, they can only make educated guesses. That's why trading is quite risky.