Difference between Investment and Speculation
Investment Decision | Finance
Investment is the process of the commitment of funds at present with the expectations of some positive rate of return in the future. Speculation is the process of using money with an expectation of the 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 the commitment of funds at present with the expectations of some positive rate of return in the future. | Speculation is the process of using money with an expectation of the abnormal rate of return instantly in a short period of time. |
| 2. | Investment is generally done for a long period of time. | Speculation is done for a short period of time. |
| 3. | The rate of risk is generally lower in case of an investment than speculation. | The rate of risk is higher in case of speculation than investment. |
| 4. | There is the 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 speculation. |
| 6. | Investment is done very carefully analyzing the performance of the company. | Speculation is done on the basis of rumors, hearsay, technical chart, and market psychology. |
| 7. | The behavior of people that involve in investment is generally conservative and cautious. | The behavior of people that involve in speculation is daring and careless. |
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