Investing Or Speculating?

For the lot of people who are not so well versed in financial lingo, investing and financial speculating seems to be one and the same. There are however, finer points to consider. In any case, both involve movement of monetary funds. And since this entails the use of money, it may be wise to know exactly

• What investment is
• What financial speculating is
• And what the difference between the two is

Choosing to invest or to speculate is a matter of personal preference. It does not really matter how much money you are willing to spend in the first place; but rather, how much of a sport can you actually put up with in the field of profit. 

Investment

Investment can be describes as a form of deferment of consumption. The protocol is: you buy an asset which you hope will bring you an ROI or return of investment in the future. Naturally, you are hoping that the ROI is worth much, much more than the price o f the asset itself.  The term deferment of consumption in this case basically means that a period of time passes between the acquisition of the asset and the showing of the ROI. 

For example, you decide to go for the whole hog and invest in a computer shop.

1. First, you invest in the location: you buy a piece of land, have an architectural structure built on it to fit the specifications of a workable shop. Next, you buy the hardware – from the computer units to the tables, to the air conditioning unit, etc.
2. Next you buy the software and then hire personnel to man the shop.
3. While the shop is still under construction, you send your personnel into a form of computer training and business management.
4. Once the shop is open for business, you shell out more money for advertising and even promotional gimmicks to attract potential customers.
5. All this entails monetary funding. If you play your cards right, you might enjoy the projected ROI between 6 months of operation and a year.

In any case, a long period of time lapses between the actual investment spending and the ROI. 

Financial Speculation

Financial speculation, (known to some sectors as agiotage,) on the other hand is all about gaining profits by studying fluctuation trends in prices. Think stock brokerage, if this definition is a bit confusing. Most people who engage in this kind of financial practice are called brokers or traders.

Basically, this maneuver entails you buying, selling, holding and even short selling commodities when conditions are favorable to you. This is a strategic gambit that entails proper timing and a good ear on the networks.

Commodities include bonds, collectibles, currencies, derivatives, real estate, stocks, and any valuable financial instrument.