Shareholder and a speculator? the assets that were purchased with the aim of benefiting from increasing their value later or generating profits are called investments. They are currently spending on assets with the aim of obtaining a future return. This investment may be in time, money, effort, etc., but the most common type of investment is a financial one, and it is called a person the one who invests in shares is the shareholder, and many people confuse the concept of the shareholder or investor with the concept of the speculator. Although there is an apparent similarity between their practices, they are two significantly different concepts based on a number of criteria that will be discussed in this article.
What is the difference between a shareholder (investor) and a speculator?
There are many aspects of difference that remove confusion about both terms; the following are the most prominent of these aspects:
Concept
The two terms differ in terms of concept, so speculation refers to a group of risky financial operations that include buying and selling assets in order to make a profit from a short increase in their price, and as for investment, it refers to the process of purchasing assets and securities that aims to achieve future returns in the form of dividends or an increase in the value of the assets themselves.
Time period
Contributions or investments are considered long-term operations, and the criterion for long-term is usually more than one year, and there are many investments, such as buildings and lands, that are invested in for relatively long periods ranging from 25 to 30 years, while speculations are considered short-term, usually not exceeding one year, and they are also limited to the events criterion, that is, their buyer is waiting for a specific event, and they end after this event.
The aim
Despite the similarity of investment tools, there is a fundamental difference, which is the goal of this investment. In the case of investment, the shareholder studies the company’s situation, policies, and financial statements; in other words, he conducts extensive research on the company to be invested in and believes that it will grow in the long run.or achieve financial or environmental goals or other goals that are compatible with the goals of the investor, and as for the speculator, he moves according to price movements based on technical analyses or market news, etc., and aims to make a profit without conducting research about the company whose shares he wants to speculate on, because he does not want to stay on these shares but waits for the movement of the share price to sell and move to another share.
Risk level
Shareholders or investors tend to make medium- or low-risk investments that are expected to generate high returns more than the possibility of loss, with a stable gradual rise and little possibility of decline, whereas speculators tend to bear very high risks with large price fluctuations, due to their goal of buying when prices are low and selling when prices are high to make a profit.
Make decision
Decisions are taken by speculators based on news, rumors, technical analysis, intuition, and the study of market and consumer psychology, while shareholders and investors move away from these criteria and tend to analyze the financial data contained in the company’s financial statements, analyze profits and sales, and so on.
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