The Difference Between Day Trading and Long-Term Investing
In this episode, we will be talking about the difference between day trading and long-term investing. Our goal is to shed some understanding around what each of these strategies involves and how to approach them in a way that helps you reach your financial goals. Since sport ended with the pandemic, a lot of people have become interested in day trading, and with apps like Robinhood, it has never been easier to test out this exciting trading paradigm. However, the issue with day trading is that it encourages traders to put all their eggs in one basket, which, like gambling, can result in big wins but big losses too. Here at HFM, we don’t advise ditching day trading completely, but rather champion the long-term strategy of investing in a globally diversified portfolio of stocks and bonds. In today’s episode, you’ll learn what investing in stocks and bonds involves, how it can help you build wealth safely, and when it is appropriate to allocate a portion of your finances to such an investment strategy. So tune in today and hear how we can help you avoid making the big financial mistakes that could jeopardize your future.
Key Points From This Episode:
- Why many people have started day trading since the pandemic.
- How accessible it is to day trade easily with apps like Robinhood.
- The value of taking caution while day trading and some advice for a better strategy.
- Investing in a globally diversified portfolio instead of trying to beat the market day trading.
- Setting up the risk of your investments based on what your goals for them are.
- The difference between aggressive and conservative investing; stock and bond allocation.
- What is done with your money and what the risks are when you invest in stocks versus bonds.
- Why the long-term investment approach is safer than a day trading strategy.
- Similarities between day trading and gambling.
- The idea that day trading should not be avoided completely but balanced with safer investing strategies.
- Other lump sums that should be arranged before allocating money to investing.
- How Jason and Tyler can help listeners avoid making big financial mistakes.
- Using the HFM Ignite platform to get your feet wet with investing.
“When you put all your eggs in one basket and if the only thing you own is Tesla, well Tesla is down 20-something percent from its high right now.” — Tyler Reedman [0:03:38]
“When we think about investing for those short, mid, and long term goals, we are really talking about investing in a globally diverse portfolio of stocks and sometimes bonds.” — @Jason Gabrieli [0:05:29]
“When we talk about aggressive or conservative investing, usually what we are talking about is the percentage allocation in your portfolio between stocks and bonds.” — @Jason Gabrieli [0:06:20]
“It is generally safer if you are investing in thousands of companies versus day-trading where you might only be invested in two or three or one company.” — @Jason Gabrieli [0:07:56]
Links Mentioned in Today’s Episode: