Investing vs. Trading
You may hear the terms "investing" and "trading" interchanged often, and while they essentially refer to the same action, they function differently for distinctive purposes.
Both investing and trading are accomplished by buying and selling stocks and other assets. However, investing typically connotes a long term approach, while trading is an immediate action.
Trading may be considered riskier because its goal is to buy and sell investments relatively quickly in an attempt to make a profit. In these cases, timing can be crucial to generate a maximum return, which is why you may see day-traders sweating bullets waiting for the "right moment" to buy or sell. The research and monitoring that active traders commit to this objective requires far more time, energy and at times transaction fees than simply investing might. Markets move unpredictably, which means even the most astute traders may take on significant risk.
Due to the inherent risk in trying to "time the market just right", traders should be able to tolerate the risk of losing their investment.
In contrast, rather than leveraging short-term price fluctuations for trading, investing maintains a focus on overall financial goals. Even when the markets are volatile, holding investments long enough has proven to be an effective strategy.
This is because historically speaking, the stock market generally has trended upward, despite even the dips of bear markets. Focusing on long-term investing allows investors the potential to benefit from the upward movement of the market over time. Investors can generally let their investments develop on their own while they can focus on their other financial goals.
Bumped as an investment tool
With Bumped, users are getting free fractional shares of stock as a reward for their everyday purchases. Bumped users can sell their shares if they desire, but our platform encourages longer-term holding, which has shown to be a beneficial strategy for investors over time. With Bumped– once you have earned stock rewards, they’re yours to have and to hold. If kept in your Bumped account, you can also see them potentially grow in value with time.
We believe in making the stock market more accessible and approachable to everyday people. Anyone who makes purchases can now invest in stock, and in themselves with a reward that can grow. Many folks do, however, fulfill their regular grocery or shopping runs– and can now invest in themselves further than those purchases alone with a reward that can grow.
This article is intended for educational purposes. Bumped does not offer financial advisory services. For more information about investing and Bumped, visit our blog.