An investment, as defined by Merriam-Webster, is the commitment of funds with a view to minimizing risk and safeguarding capital while earning a return. Generally speaking, investments are made for the long haul, with the belief that the value of the investment vehicle of choice will increase in value. When you say investment to most people in the United States, the first vehicle of choice in their minds is the Stock Market, with Mutual Funds in second place, followed more recently by property in third place, and Bonds in a distant fourth. Commodities and currency trading are rarely considered investments because of the speculative nature of those markets. Speculation, as defined by Merriam-Webster, is the assumption of unusual business risk in hopes of obtaining commensurate gain.
A quick review of the definitions of investment and speculation immediately highlights the inherent amount of risk as the major difference between both practices. If you were to survey all those people who invested their life savings in the Stock Market and Mutual Funds just prior to the market crash of September 2000, do you think that they would agree that the Stock Market and Mutual Funds...
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