If someone were to ask what I thought was the best method to make money in the stock market, investing or trading, it would not be an easy question to answer. Both investing and trading offers their pros and cons. I personally wouldn’t consider myself an investor or a trader. My own method to achieving portfolio growth is mainly short term investing along with some long term investments and and even smaller amount of trading.

My opinion on the matter is that as an amateur in the stock market, you should consider trying all forms of wealth growth until you find what works for you. I’ve been in the stock market since 2005, and here’s what I consider to be the pros and cons of investing and trading.

Investing

Pros:

• Statistically you are more likely to succeed than traders are in the long term
• More likely to have consistent percentage returns per year than traders are
• Less time consuming and psychologically less stressful
• Less commission fees than trading

Cons:

• Lower percentage returns in the short term
• Easy to lose interest due to lack of involvement required. Usually leading to poor portfolio performance.

Trading

Pros:

• If successful, a trader’s percentage gains are typically higher than investor’s
• There is always money to be made somewhere in the short term
• Builds even more discipline than investing does (assuming you are successful)

Cons:

• High broker fees due to commission being taken on buy/sell orders
• More time consuming and considerably more psychologically stressful than investing

Overall, I would ultimatley recommend investing over trading simply due to the fact that most individuals just aren’t capable of being successful as a trader. It takes vast amounts of market knowledge, discipline, understanding of psychological issues, and a little bit of luck to make it as a trader. Whereas an investor can simply choose a few mutual funds coupled with some fundamentally strong long terms stocks and end up more successful than most would-be traders after 10 years.