Difference between Investment and Speculation| Finance

Difference between Investment and Speculation

Difference between Investment and Speculation
Investment Decision | Finance


Investment is the process of commitment of funds at present with the expectations of some positive rate of return in future.Speculation is the process of using money with an expectation of abnormal rate of return instantly in a short period of time.

Difference between Investment and Speculation

S.No

Investment

Speculation

1.  Investment is the process of commitment of funds at present with the expectations of some positive rate of return in future. Speculation is the process of using money with an expectation of abnormal rate of return instantly in a short period of time.
2.  Investment is generally done for long period of time. Speculation is done for short period of time.
3. Rate of risk is generally lower in case of investment than speculation. Rate of risk is higher in case of speculation than investment.
4. There is stability of earnings in case of investment . There is no stability of earnings in case of speculation.
5.  An investor user his/her funds during the time of speculation. A speculator uses borrowed funds during the time of specultion.
6. Investment is done very carefully analysing the performance of the company. Speculation is done on the basis of rumors ,hearsay,technical chart and market psychology.
7. The behaviour of people that involve in investment is generally conservative and  cautious. The behaviour of people that involve in speculation is daring and careless.
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Author: Smirti

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