Speculating and investing What is speculating?

Speculating and investing

What is speculating?

Speculating is not investing, is to take chance with a hope of making big money, example a new company is opening or offering shares like (IPO) Initial Public Offering that a new company listing on a stock exchange .why I say this is a speculating, it because the company is new, its management hasn't proven themselves and you have n financial records to see how they manage their financial records.

Speculating is not all bad because you may win big on the other side you may lose all your money You When you put your money in a company like this one it not investing it speculating .The question that came to my mind, Is speculating good or bad? When you speculate you take chances with your money just have to calculate when you speculate and know what you are speculating and not investing.

Investing

Investing is the opposite of speculating. Before you invest your money you calculate the risk vs. reward, do your home work, read the financial records of that business, and see if there are making money for the past 3 years and how much debts the company has. You will need this to make an informed decision if the company is not making any profits and has debts how are there going to pay back .The creditors will take asset from the business, the business will lose value.

This are just few basic information to minimize the risk and make a good investment you have to invest in a business you know or in a business you understand how are there making money .The best investment you can make it to educate yourself in investing that will save you money and time.