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The main difference between long-term investing and day trading revolves around time. The goal of long-term investing is to build wealth over a long period of time by carefully creating a portfolio of stocks and assets such as mutual funds(https://www.edelweiss.in/oyo/mutualfund), bonds and other financial instruments.<br>Get more such insights into long term investing & trading in this presentation.
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Introduction What is Long-Term Investing? Long-term investing refers to a strategy where you hold on to your investments for a long period, which is generally five years or more. It’s one of the ways to make meaningful gains from stock market and equity mutual funds investments, which give the desired results only when you remain committed for the long haul. What is Trading? Unlike long-term investing, where transactions take place once in five years or more, the frequency is pretty high in trading. It refers to a practice whereby investors buy and sell stocks, commodities and other financial instruments frequently, sometimes even in a day.
Difference between long term investing & day trading The main difference between long-term investing and day trading revolves around time. The goal of long-term investing is to build wealth over a long period of time by carefully creating a portfolio of stocks and assets such as mutual funds, bonds and other financial instruments. Day trading, on the other hand, is an approach where the trader buys and sells shares very frequently. The transactions could occur even within a single day. The aim of short term trading is to earn high profits from price fluctuations within a small time horizon..
Pros & cons of long-term investing PROS: Brings Compounding into Play Takes emotion out of equation Easy to Correct Mistakes CONS: Risk of losing principal if company doesn’t perform Premature Withdrawal erodes gains
Pros & cons of trading PROS: Easy and Convenient Quick Liquidity CONS: Chances of suffering losses Leads to timing of market
conclusion Day trading and long term investing are two vastly different approaches to creating wealth in the stock market. You need different set of skills to excel in these investment avenues. But if you are a beginner, it is better to avoid day trading until you gain some experience in the stock market.
