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Trading or investment. What way to make money?

Modified date: 28/07/2021
Trading or investment. What way to make money?

Every year, bank deposit rates update their historic lows. Deposits in banks have long ceased to bring real, tangible profits to depositors. Nowadays, bank deposits are more like a temporary freeze of funds. And many are in search of a more valuable and profitable investment than bank deposits and fiat money.

The current year has shown that fiat money is fading into the background and cryptocurrency has proved itself to be a valuable asset. In addition to Bitcoin, the value of Altcoin has increased and many have turned their attention to them. Altcoin coins can be bought in a much larger amount at a low price, and they can give profits many times more than Bitcoin.

So, having studied the cryptocurrency market, evaluating all assets, conducting technical analysis, a portfolio of N number of coins is finally ready. What next? How to make money on it? At this moment, you need to make a difficult choice: do you need to become an investor or a trader? For those, who are just starting to get acquainted with this area, it will not be easy to choose between these two ways of earning money.

Trading.

The main task of a trader is to buy at a lower price and sell at a higher price (they are often called speculators). They make profit from the difference in price. A trader can even hold his position for years, but he will sell the stock as soon as the price rises to the expected level. Most often, a trader buys or sells assets for a short time - from a couple of seconds to several weeks, sometimes months. This kind of trading is time consuming, requires you to make quick decisions and is highly stressful. The trader is constantly balancing between profit and loss. You need to have nerves of steel so as not to break off at a crucial moment.

Pros:

  • Good income. A trader's income in a couple of months frequently exceeds an investor's annual dividends.
  • Quick result, which is visible almost immediately, sometimes after the first transaction.
  • You can start trading with minimal budgets. This is a big plus for beginners.
  • Trading may well become the main source of income. No bosses, no work schedule. Your income depends only on you and it is not limited, unlike the salary. It doesn't matter if the market rises or falls, a trader can earn in any situation.

Minuses:

  • High risks. The trader takes more risks. One wrong move and the loss can be enormous.
  • Training. A trader needs to constantly improve his proficiency, undergo training, and adjust his system. Everything has its time and the market also becomes obsolete over time, as well as the chosen strategies.
  • Time consuming. For training, market research, fundamental and technical analysis, waiting for market entry and closing a deal.
  • Constant severe stress. This is often the main reason why traders choose other ways to make money.

Investments.

The investor is engaged in investing money for a long-term period of a year or more. An investor receives profit from the growth of prices and the interest % received during the investment. Often, the investor's profit is much lower than the income of an experienced prospective trader who makes a huge number of trades every year. But the investor's risks are lower. The long-term trend is always upward. With patience and willpower, the resulting profit eventually compensates for the long wait. If you stick to your investment plan and make regular investments, investing will provide you with not only passive income, but also a carefree later life.

Pros:

  • Stable passive income. You can successfully invest once and receive interest from year to year.
  • Time-efficient. There is no need to regularly undergo training, study the market every minute, or monitor the trend of assets.
  • High chances of success. From statistics: 85-90% of traders fail in the market. Among investors, this figure is much less - 30-40%. An investor will not incur losses until he sells his assets or the company goes bankrupt. An investor can easily ride out even a protracted crisis, while traders risk taking a loss on every trade.

Minuses:

  • You need a basic income. It is necessary to have a constant, stable income from the main activity so that it covers your needs and leaves you with extra funds, which can be used for long-term investments.
  • Less income. In short-term perspectives (e. g., in a year), an active trader will earn significantly more than a conservative investor.
  • Long wait for profit. It takes a lot more patience and time to wait for the profit.
  • The size of the deposit. In order for the return on investment to be substantial, you need to invest a lot. Sometimes the entry threshold is very high and not everyone can afford it.

Do you have to choose?

Most success can be gained by combining both: trading and investing. They use part of the funds for trading in order to increase the starting capital by two or more times, and the other part, for example, 50% of funds - they invest in a reliable company for long-term investments. So they achieve two goals at once - through investments they form a financial cushion in case of an unfavorable market situation, and thanks to trading they increase capital and achieve financial goals.

Zion Finance is your reliable source of passive income. Our experienced team of analysts takes care of making the most profitable and successful investments, diversifying possible risks as much as possible. You can rest assured - your assets are in good hands.