Are you an investor or a speculator?

This is actually a very important question because it defines what you should do and what you shouldn't.

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What is investing?

When you invest into an asset you expect that this asset will give you a return. If you buy shares you expect to get dividends. If you buy a bond you will get interests. You get a return for depositing your capital.

Investing has also often an economical utility. The people who get your money can use it for a certain purpose and pay you for it.

A lot of people are speaking about passive income. It's actually nothing else than investing!

What is speculating?

You are speculating when you buy an asset and you expect to sell it at a higher price later on. You speculate on the price difference.

There is nothing wrong with speculating but it's important to understand what you are!

Are you an investor or a speculator?

I'm an investor because I can't sleep when I speculate. It stresses me and I don't feel well when I'm trading assets in the hope of making a profit on the price.

However I've no problem in investing. I invest into an asset that I expect to give me a good return at a low risk. I have the patience to wait for the return to accumulate. Not everybody is like that however. Maybe you don't have this patience and you enjoy the stress that goes along with trading.

Try to figure out what you are and try to get better at it! Knowing yourself is the key to getting better at what you are doing.

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