Investing vs. Speculating… Are You Feeling Lucky? [Video]

by Michelle Smalenberger, CFP® / May 24, 2022

 

Let’s compare investing vs. speculating. Are you someone who likes to buy a lottery ticket, hoping yours is the winning number?  Or maybe you like to find the hot buy of the day versus buying something that will last a long time, but you may spend a little more to get it?  Or like the tortoise and the hare getting somewhere fast versus slow and steady wins the race?

First let’s talk about these personalities and which one you are.  We are going to dig into how that may affect or even define your investment personality too.

Investing

WHY? These people have a purpose. They know the amount they will add to their accounts regularly. They also know the goal they are trying to save for in the future.

ANALYSIS: There is fundamental research that can be looked at from history.  There are real numbers (sales, earnings, profit)  they can look back at to create a strategy.

TIME: Long Term Horizon

GOALS: Growth and Preservation

RISK: This can be adjusted for your comfort.

Summary: These individuals have a purpose for why they save what they do and can do research that will show their long term risk and growth expected.  Their risk can be adjusted over time as their life changes.

Speculating

WHY? This person has more of a fear of missing out from the latest hot buy.  There’s an investment that is returning a lot of money fast, how can I find enough money fast to get into it?

ANALYSIS: Unknown of historical data that goes back for years.  This can become more like gambling in the sense that there is a chance I could make a profit, but also a chance that I could lose a lot.

TIME: Short Term Horizon

GOALS: Growth and profit

RISK: Unknown

Summary: Someone who is speculating may have more of a fear, an unknown time horizon, short term hope of getting a high profit and getting money back.

In conclusion, if you’ve been speculating and made a large profit, but now you’re ready to start investing please let us know how we can help get you into a portfolio that is adjusted for the risk and return you desire.

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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.