Investments and Speculations are two very different concepts. Major differences between investment and speculation are as follows:
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.
Investment: It is a long term planning (at least one year or more).
Speculation: It is a short term plan (only for a few months/days/hours).
3. Risk Disposition
Investment: It involves only modest risk.
Speculation: It involves a higher level of risk.
4. Expected Rate Of Return
Investment: It expects a modest rate of return because of moderate risk.
Speculation: Due to the higher level of risk involved, it expects a higher rate of return.
Investment: Investor’s own funds and the 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.
Investment: Investor possesses caring and cautious behaviour.
Speculation: Speculator possess careless and daring behaviour.