Trading and
Investing

Chapter 1

There are plenty of differences between trading and investing. Many people go into trading, looking at is as a hobby.

When they see it as a hobby, it is highly likely that they will make what I call “hobby money” or “hobby income.” When you do something for fun, it’s great to make a couple extra bucks. It’s nice to make a few hundred euros a month but it will never become something serious unless you become serious.

So trading in an excellent self-employed job. Using the cashflow quadrant of Robert Kiyosaki, I would put trading in a self-employed job on the left side of the quadrant, not on the right side. Many people see trading as investing or see themselves as investors when they are not.

When they are trading with their money, they put in their time to get more money, so they are still locked up in this time for money scheme, and they are not putting money to work for themselves. If you have a large balance and you are a good trader, it can be a very high-paying job with a very high hourly tariff.

But at the moment that you’re not trading, you’re not making any money. The main difference with investing is when you have an investment doing the work for you.

You might need to give it a certain amount of attention, especially at the beginning, when you have to construct the deal, get the deal, run and monitor the investments. But if you do nothing with a good investment, for example, when a real estate object has a renter and the renter pays his bills, you don’t have to do anything for at least 30 days until they pay their bill again.

You only have to do somrething when they don’t pay their bill and you need to get behind that or when something breaks at the house or any other improvements need to be completed.

You might have spend 15 minutes on the property to put things back in order. That’s investing. Investing is the money that works for you converted into an asset and that asset is giving you actual money on a monthly, quarterly or yearly basis.

What I would like to see is traders creating an investor mindset. Traders must prepare themselves to become an investor, leave that self-employed job, and move to the right side of the cashflow quadrant.

As long as you remain a trader, if something happens with you that makes in impossible for you to trade, then you have no income. Thus, you will suffer or start spending from your balance. If something happens to you, your family will have nothing else other than the balance in your trading account. If they don’t have the skill of trading or investing to do something with that balance, they will be forced to eat up your balance slowly until it’s zero and that’s what you leave behind.