Saving, Managing Debt, and Budgeting

Investing Versus Speculation

What is the difference between “investing” and “speculating”?

The difference between investing and speculating can be a complex topic. Its origins go back many years, perhaps to the 1920s, when economists and writers tried to illuminate the distinctions between the two concepts. At this time, the only vehicle considered by many to be an investment was bonds, because they provided a steady return, and you could retrieve your principal. When an asset or a share in an asset is acquired with the hope that the investor will receive a profit from the revenue generated by that investment, in addition to retrieving one’s principal, this is characterized by many as investing. Speculation is defined by many as when someone buys a share of an asset (believing its market value may rise), holds it for some period of time, and sells it to someone else at a higher value.


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