Major differences between investment and speculation are as follows:
1. Meaning
Investment: It is a purchase of assets with the expectation of regular return.
Speculation: it is a financial transaction with an expectation of capital gain or substantial profit.
2. Planning
Investment: It is a long term planning (at least one year or more).
Speculation: It is a short term plan (only for few months).
3. Risk Disposition
Investment: It involves only modest risk.
Speculation: It involves higher level of risk.
4. Expected Rate Of Return
Investment: It expects for a modest rate of return because of moderate risk.
Speculation: Due to higher level of risk involved, it expects higher rate of return.
5. Leverage
Investment: Investor's own funds and property is used.
Speculation: Generally borrowings from others are used.
6. Income Type
Investment: Income is certain and stable in investment.
Speculation: Income is uncertain and unstable in speculation.
7. Behavior
Investment: Investor possess caring and cautious behavior.
Speculation: Speculator possess careless and daring behavior.
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