What is the difference between trading and investing?  

Hi, my name is Shane O’Hara and I am a Certified Financial Planner™ professional at ProVise Management Group. One of the questions we hear often is, “What is the difference between trading and investing?”

People can become confused because the terms “trading” and “investing” are often used interchangeably. However, they are very different financial practices. Trading is a short-term strategy where the investor attempts to follow current trends and guess which way the market or investment might go next. It involves frequent buying and selling which the trader hopes might boost returns, but it can be expensive, time-consuming and typically leads to lower long-term returns.

Investing is a more long-term practice. People who invest tend to hold it for months or years with the goal of gradually increasing their wealth over time. Someone who has most famously used this tactic has been Warren Buffet, who believes in buying quality investments and holding onto them for years and, in some cases, forever.  

If you’re ready to talk to someone about helping you reach your investment goals, one of our planners at ProVise is here for you.