What is investing?

You must have heard everywhere that you can't be rich without investing.

I have talked to a few people and they told me the road to being wealthy is majorly made up of investing.

Warren Buffet started investing at 11 and became the richest man after decades. The point here is investment takes time and most times you need to look long term. But what is an investment?

A lot of people confuse investing with speculation.

The truth is most people are involved in mostly speculations

Warren Buffet will say this " if you had 20 holes alone and those holes represented your opportunity and for every investment you make one hole closes. How would you treat your investments?"

I am sure your answer is as good as mine. You will be careful before blowing off those holes
This is how you should treat your investments.

What then is an investment?

Investopedia defines an investment as an asset or item acquired to generate income or appreciation.

Appreciation refers to an increase in the value of a certain asset or item.

However, I feel this definition is not encompassing.

The number one book on investing recommended by Warren Buffet the intelligent investor defines investing as

an operation which upon thorough analysis promises safety of capital and adequate returns.

When I initially started crypto back in 2017, I was mainly involved in speculating rather than investing. The most painful part of it is that I thought I was investing.

Thorough analysis refers to having adequate knowledge about almost everything about the asset or item. This includes knowing the economics, the product and most likely prospects.

If after this, your capital is preserved and there is some form of returns that are adequate, then you are investing.

When you discover that price doesn't influence your judgement of whether to sell or buy, then you might say you are not speculating.

When investing, sometimes imagine if you didn't have access to the price feeds, will you still buy into the asset?

Well, I guess with that being said you know where you fall into.

Types of investment

In the past, stocks, bonds and real estate were regarded as the only investments.

Today, we have crypto and other things.

I feel that most people in crypto are not investing. In fact, I can say that over 50% of people who do crypto are speculators.

They are most likely trying to make a profit from the market's inefficiencies.

How many of you have read the white paper of the coins you hold?

The truth is only a few and this is why when BTC is down, a lot of people react so terribly.

They are here for the price not for the intrinsic value of the asset.

Same thing for new users on the hive blockchain who cry when they look at their estimated account value.

Are you an investor a speculator? Does any of your investment promises safety of your capital and adequate returns?

What is your best investment?

References

• Investopedia

• The intelligent investor by Benjamin Graham