Trading Vs. Investing

• Investing money in the market typically means buying shares you intend to hold on to from several years to several decades. Investors tend to hold through the ups and downs of the market because they believe their investments will progress over time. Trading, on the other hand, refers to buying and selling positions more often in an attempt to profit from volatility in the markets. Traders are not usually concerned with long term growth.
  
  

Technical Analysis

• Technical analysis is a useful analytical tool for both investors and traders. This is a method of analyzing future potential of shares based on their past price and trade volume performance. Technical analysts use stock charts in order to determine if share prices are trending up or down. Stock charts are also useful for determining how much demand there is for a company's shares.
  
  

Fundamental Analysis

• Fundamental analysis is another common method used for analyzing a company's future growth potential. Fundamental analysts focus on company earnings reports, sales records, cash flow and other similar factors. In addition, they focus on the nation's macro economic factors, such as inflation and growth in order to determine its affect on the future outlook of their investments.
  
  

Income Vs. Growth

• Depending on what stage you are at in your life, you may wish to invest for growth or for income. Growth investors and traders have a goal of increasing their wealth. As you near retirement, however, you may be more concerned with preserving your wealth and earning an income from it. Income investors primarily focus on economically stable stocks that pay dividends and bonds that earn interest.
  
  

Mutual Funds and Stocks

• Investing in individual stocks has some disadvantages. It takes a lot of time and experience to learn to analyze the markets and a company's future growth potential. Additionally, it is difficult to properly diversify your investments. Mutual funds offer a solution to both these disadvantages. A mutual fund is a group of stocks that are professionally managed. Because a mutual fund typically owns a large number of different stocks, it also offers investors shares in a well-diversified portfolio for a relatively small investment.