Difference Between Short Term and Long Term Investing in Equity
People usually either make money in the short term or lose money in the short term. This is Because Short Term Investing in the Markets is a Zero Sum Game. One person has to lose money for another person to make money. That is known as Trading.
However, long term investing in Equity is a Positive sum game. Because over the long term in the stock market, all investors make wealth . Because it is no longer someone's loss is my gain game. It is the game of finding a seat in the Economy. And like a Boeing Aircraft takes off to a destination, all investors who find a seat in the aircraft take off together and all passengers reach their destination smoothly with perhaps a little turbulence at times which too isn't much of a bother. This is called investing.
Now is there any negative sum game . Saving your entire money in Banks can prove to be a negative sum game, because your returns both long and short term may lag inflation resulting in a continuous leakage of value from your Wealth. This is like running on a tread mill. You may run for as long as you like but you will go nowhere.
Hope you can now understand the difference between Trading (Zero Sum Game) Investing (Positive Sum Game) and Saving (Negative Sum Game).
I rest my case.
Disclaimer : This Article is only for information Purpose and should not be treated as Financial Advice.
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