Difference Between Investment And Speculation
The major dissimilarities or difference between investment and speculation can be pointed out as follows:
1. Introduction
Investment: Act of purchasing assets or financial securities with the aim of generating stable income in the future for longer period of time.
Speculation: Act of purchasing risky financial assets or instruments with the aim of gaining significant return in short period.
2. Risk Undertaken
Investment: Lower risk
Speculation: Higher risk
3. Expected Return
Investment: Investor expects average or satisfactory continuous return on his investment
Speculation: Speculator expects abnormally high return on his investment.
4. Duration/Time Horizon
Investment: It is done for longer term generally for more than one year.
Speculation: It is done for short period generally for few months.
5. Nature Of Return
Investment: Income is more stable and certain
Speculation: Income is unstable and uncertain
6. Attitude/ Behavior Of Investor
Investment: More disciplined, cautious and caring
Speculation: More aggressive, less concentration and daring
Also Read:
Also Read:
7. Fund Used
Investment: Own saving and personal properties of investor are used
Speculation: Generally speculators uses borrow fund from others
8. Objective/Purpose/Aim
Investment: To make regular income for longer period of time
Speculation: To make abnormal or significant gain in the short period.
Investment Vs Speculation (Comparison Chart)
I hope this post is helpful to understand the difference between investment and speculation and to make comparison between them.
Investment Vs Speculation (Comparison Chart)
Basis
|
Investment
|
Speculation
|
Introduction
|
Purchase of assets and securities to generate income in the future
|
Purchase of risky assets and securities to generate significant income in short period
|
Risk
|
Lower
|
Higher
|
Expected Return
|
Average
|
High
|
Duration
|
Longer period
|
Short period
|
Nature Of Income
|
Certain/Stable
|
Uncertain/Unstable
|
Investor's Attitude
|
Cautious and disciplined
|
Aggressive and daring
|
Fund Used
|
Own fund
|
Borrowed fund
|
Aim/Purpose
|
To make regular income
|
To make abnormal gain
|
I hope this post is helpful to understand the difference between investment and speculation and to make comparison between them.
