Are you an Investor or Trader?

Before I started dabbing in financials (stocks, bonds, etc.), I used the terms investor and trader interchangeably. Did you know that there are differences between these two terms?

Both the investor and trader allocates capital, or a sum of money, with the expectation of a financial return through various means like equity, debt securities, real estate, currency, commodity, derivatives, etc.

The differences between an investor and trader are:

Investor Trader
Buys and holds shares for the long term (years or decades) Hold shares for short-term and look for quick profits in a matter of minutes, hours or days
Performs fundamental analysis to look at the health of the company (its business prospects, dividend yield and growth, financial statements, etc.) Performs technical analysis to study chart patterns (uptrend, downtrend, support, resistance, etc.) to determine where the price of the asset is heading
Typically gains from dividends or capital gains of assets (appreciating share price) Gain from both appreciating stock price and depreciating stock price (short)
Concerned with the intrinsic value of share Concerned with the intrinsic value of share
Typically spends less time in monitoring prices as fluctuations even out gradually over time Typically spends more time in monitoring prices as share price 'roller coasters' in short term. The more it fluctuates, the more a trader makes
Typically lower risk which translates to lower returns Typically higher risk. No risk no gain! So typically higher returns (and losses)

For me, I don’t want to spend too much time on monitoring prices or get panic attacks when share price plunges and am contented with 4% to 10% annualized return (through dividends). So my style is more like accumulating various assets (bonds, stocks, gold) and hoping that they appreciate in the long term. So yes, I am an investor (for now).

So are you an Investor or Trader?


The content on this post is for informational purposes only. It does not provide investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Rates and terms set on third-party websites are subject to change without notice. This is an independently-owned site and all opinions expressed are my own.

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