What Makes a Good Investor

Many people talk of themselves as being investors. When I hear someone mentioning that he or she is investing some money I always ask them: Are you investing or trading? I usually get people confused with this little question. The fact is: Most people dont know what investing is and they cannot tell the difference between investing and saving on one hand and trading and gambling on the other hand.
So lets look at the four most common types of what you can do with your money if you dont spend it:
Saving

Saving is about preserving what you have without the intention of gaining anything. Saving money means you put money away in a safe place, so you can use it later to either invest it, spend it or do whatever you like with it. It does not mean exposing your assets to any type of risk at all. Saving could be in the form of a savings account, cash, gold or whatever does not put your money at risk. An investment fund or a 401K is NOT saving money. Investment funds like the name suggests is investing.
Investing

Investing has the idea of long term natural growth associated with it. Investing money means giving your money away with a certain amount of risk and the chance for a certain profit. Often the exact amount of the profit is not known in advance. So is the risk that you might lose your money or a part of it. In general an investment is a commitment to convert liquid assets into more illiquid types of assets for a minimum of 2 years or more. Yes, investing is a long-term commitment and something that has made many people unspeakably rich. Investing is not for nervous or paranoid people. It is for the smart and bold. If you are paranoid, you should be saving instead of investing. If you are looking to make quick cash you should be trading.
Trading

Trading is more similar to dealing in any particular goods. There game is buying low and selling high whether you are dealing in textiles, watches or stocks. The time horizon for a trader is short term. A trade can be from a few minutes to a few months. It doesnt really matter what the time frame is. What matters is your intention and mind set. If you strive to buy low and sell high, you are a trader not an investor.
Dont get excited over your trades. If you a seeking pleasure and you find that trading is actually fun and giving you a certain kick, then you are not trading you are gambling
There are different intentions associated with different types of actions. They could be described as below:
Mindset: Preserving

Action: Saving

Predictability: High

Risk: Low

Potential Reward: Safety
Mindset: Growing

Action: Investing

Predictability: moderate

Risk: moderate

Potential Reward: long-term appreciation
Mindset: Making money

Action: trading

Predictability: low

Risk: high

Potential Reward: high return
Mindset: Excitement

Action: gambling

Predictability: very low

Risk: very high

Potential Reward: loss
When you go from Saving down to gambling with each step predictability is decreasing and risk is increasing.
So when you think about investing your money, think of your goal first then decide what your strategy should be.