It’s a question not enough people ask themselves:
Are you actually investing — or just trading and hoping for the best?
Trading. Investing. It’s all just “moving money around,” right?
Not quite. In fact, misunderstanding the difference could quietly sabotage your financial future.
I’ve seen people lose years of hard-earned savings because they didn’t realise what they were actually doing with their money.
So what’s the difference?
And how do you make sure you’re choosing the right approach for your goals?
Trading vs investing: what’s the difference?
At first glance, trading and investing look pretty similar. You buy things like stocks or funds and hope they grow. But the approach, mindset and even the end goal are completely different.
Let’s start with trading.
By the way, I also published a YouTube video on this very topic, which you can watch here if you prefer:
When people picture a trader, they often imagine the chaos of a trading floor — people shouting, phones ringing, a scene straight out of The Wolf of Wall Street.
These days, most of that action has moved online.
But the basic idea is still the same: traders are trying to make money from short-term price movements.
They might hold a stock for a few hours or even just a few seconds, aiming to profit from small changes in price. It’s fast-paced, high-pressure and, for most people, incredibly risky.
Sure, we’ve all heard stories of traders making a fortune in a short time.
But what you don’t hear about as often is that over 80% of retail traders lose money.
Not because they’re lazy or clueless — but because they’re up against full-time professionals armed with algorithms, huge data sets, and research teams.
Trying to beat them is like turning up to a Formula 1 race on a scooter.
And here’s the thing — many traders don’t even care what they’re buying. They’re simply reacting to patterns on a chart.
And when it goes wrong (which it often does), they’ll double down in the hope of a big win next time. It can quickly spiral into something that looks a lot like gambling.
Investing, however, is a completely different mindset.
As an investor in the great companies of the world (the stock market), you’re not chasing quick wins.
You’re focused on building wealth slowly and steadily over time. You need time, patience and discipline. You put your money to work, while you get on with your life.
There’s no finish line.
No final score.
The aim is simply to stay in the game and grow your wealth in a way that’s sustainable — maybe even passing some of it on to future generations.
Think Warren Buffett. He didn’t build one of the world’s largest fortunes by making daily trades. He picked great companies and held them for decades.
And history supports this. If you’d invested in a basic S&P 500 index fund — which tracks the 500 biggest U.S. companies — and left it alone, you’d have earned around 10% a year on average over the past century.
Meanwhile, most day traders can’t even come close to matching that.
Are you investing… or trading in disguise?
Now here’s the tricky bit. Most people think they’re investing, but they’re actually trading — and often without even realising it.
So how can you tell which camp you’re really in?
Give yourself a point for each of the following that sounds like you:
- You’re in and out of the market all the time
- You’re always hunting for “the next big thing”
- Your portfolio is made up of just a few stocks
- You jump into whatever’s currently hot
- You’re disappointed if your money hasn’t doubled in a few years
- You believe you can “beat the market”
- You invest based on headlines or gut feelings
- You don’t have a structured, long-term plan
If you scored three or more, you might be trading without realising it — or worse, gambling.
The truth is, these habits are why so many people struggle to grow their wealth — even when the market itself is doing well.
What smart investing actually looks like
To explain what proper investing looks like, I like to share a story I often tell clients.
Growing up, I watched my grandmother “invest” by reading yesterday’s news in the Financial Times, then picking up a big old phone to call her stockbroker in London.
She’d invest in familiar names like Woolworths or M&S, and a few days later, a contract note would arrive in the post. That was the system back then.
Then came the car phone.
Then the Nokia 3310.
By that point, my dad was talking about something called “funds” — a way to invest in lots of companies at once, instead of betting on just one.
You could invest in U.S. firms, emerging markets like India or Brazil, or entire sectors like tech.
Eventually, everyone had a Blackberry.
Then smartphones.
And just like our phones, investing started to evolve too.
Index funds from firms like Vanguard and iShares made it easy to track the market cheaply, without needing to rely on expensive fund managers.
Today, the research has gone even further. Nobel prize-winning work has shown that certain factors — like company size, value or profitability — can actually lead to better returns over time.
With the right strategy, you can build a portfolio that captures these. It’s evidence-based, systematic, diversified and low-cost.
No chasing trends. No guesswork.
And that’s the key message: if I was still using a Nokia 3310 in 2025, I’d be missing out on everything a modern phone can do.
The same goes for investing.
Too many people are still using a mindset from the 1980s. Whether they’re trading individual stocks, sitting in outdated funds, or blindly copying index investing tips from the internet, they’re often stuck.
A proper investment strategy starts with understanding what you believe about money and building a plan around that.
I’ve put together a free guide called ‘Pursuing a Better Investment Experience’. It outlines the evidence-based approach we use with clients.
The bottom line: real wealth takes patience
So, how do you move from short-term speculation to long-term peace of mind?
It starts with understanding what investing is actually for.
You should be able to sleep at night knowing your money is quietly doing its job — not lying awake wondering whether to sell everything after reading one news article.
And the way you get there is by following clear, proven principles:
- Own a broad mix of investments — across countries and sectors
- Keep your costs low — high fees quietly erode your returns
- Ignore the short-term noise — and stick to your plan
- Stay disciplined — especially when markets wobble
Because while no one can predict what the market will do next week, you can control three things:
Your behaviour.
Your discipline.
And your strategy.
Those three things matter far more than any hot stock tip or market forecast.
