Investor actions are based on facts and data. Investors decide whether a new addition to their portfolio is good or bad for them after proper research. Their actions are always based on fundamentals and rarely on sentiments. Speculators’ actions, on the other hand, are based only on guesswork, rumors or tips received from others. They don’t know what they are getting into and how it will help them in building their portfolio.

Investors always go for the long haul. They know that in order to build wealth, one has to be patient and give time for the power of compounding to work its magic. Speculators are always looking to make a quick buck. Their vision is almost always short term. While investors believe in buy and hold speculators follow in-and-out, always finding new venues for making more profits quickly. One can say they believe in buy & hope instead of buy & hold.

Investors are always careful with their hard-earned money. They never put too much money in a single investment. They reduce their risk by diversifying into different investment classes, even if it reduces their returns as a result. For example, even if the stock market is doing good, a wise investor would still keep some amount of money in bonds or cash equivalents to save themselves in case of a sudden crash. Speculators on the other hand only want to maximize their profits. So they invest in just one investment class in the hope that it will give exponential returns. They consider diversification as a hindrance to earning higher returns.
If you opt for proper diversification, you are an investor.

Investors start their journey with a well-defined goal plan. Their investment decisions are based on what will help them achieve those goals in future. This means they have a clear vision and they know what they want out of their investments. They don’t let emotions or market fluctuations overpower their decisions. This is in complete contrast to speculators. Speculators have no defined road-map for their finances. They generally buy what is hot and follow others in order to make a profit from their investments. They have no clear idea as to what they want and buy based on emotions and the latest market trends.
If you invest with a proper goal, you are an investor.

Investors know they don’t have any control over the market, therefore they don’t let market volatility affect them. Moreover, since they are in for the long term, they know that short term volatility will not have a major impact on their investments and remain confident and clam. Investors take advantage of volatility. Speculators get entangled in volatility. Since their vision is short term, they are always worried about the market and keep checking their portfolio frequently. Speculators depend too much on rumors because they are not confident about their investments.
If market volatility doesn’t affect you, you are an investor.