Are you an investor or a trader?
SANDTON - This according to Shaun van den Berg, head of client education at PSG Wealth, an independent financial services group that extends its services to the Sandton area.
“The objective of trading on, or investing in, the stock market is to grow your initial capital investment as much as you can and for as long as you can, while managing risk as responsibly and sensibly as you can,” said Van den Berg.
He explained that the main difference between an investor and a trader is their time horizon or view. “Investors have a buy-and-hold mentality, while traders choose a buy-and-sell-later approach,” added Van den Berg.
He said investors are long-term players in the market and that their investments will lie dormant although hopefully growing and untouched for years or even decades. “As an investor you would pay more attention to market fundamentals such as price-earnings ratios and stock forecasts,” he said.
Van den Berg also said traders attract a lot of income tax, as they generally fall into the highest income bracket. “As a trader, your determination that the fundamentals of a share are taken care of and, therefore, there is nothing to worry about, takes a different type of nerve,” he added.
He believes that choosing to be an investor or trader and sticking to it is the right course of action.
