Write the difference between investment and speculations.

The major differences between investment and speculations are as follows −

Investment

• Purchasing an asset/security for good returns is termed as an investment.

• It is long term and has moderate risk.

• Investors will go for the cautions and conservative approach.

• The decision is made on financial performance of a company.

• The returns are modest and continuous.

• It is used for self.

• Examples &minnus; stock markets, bonds, mutual funds etc.

Speculations

• A risky financial transaction for high profits is termed as speculation.

• It is short term (less than a year).

• An investor will go for an aggressive approach.

• The decision is made on technical charts, market psychology and individual decisions.

• It excepts return at high rate.

• It is used for borrowed funds.

• Examples − foreign currencies, cryptocurrencies.