Are my purchases of stock, mutual funds, ETF's, and commodities investing, or speculation?
This depends on what your definition of the word is is. Strictly speaking, you are only investing in a company when you buy stock from them somehow.  This is usually done during an IPO or a secondary offering.  Or, if you are someone like Warren Buffet or an institutional investor, you strike a deal with the company to buy shares directly from them.  Otherwise, your money goes to someone else. Merriam-Webster defines speculate as 1b: to review something idly or casually and often inconclusively However, it also defines it as: 2: to assume a business risk in hope of gain; especially : to buy or sell in expectation of profiting from market fluctuations  The typical use of the term stock speculation vs stock investing involves definition 1b.  This alludes to the idea that little to no research was done about the stock.  This may be due to a lack of time, interest, knowledge, etc., or it may be due to a lack of information.  The former usually has a negative connotation.  The latter may have a negative connotation, though usually the connotation is one of greater risk. Strictly speaking, definition 2 includes investing as you define it along with investing in securities/commodities. "Every investment comes with a risk. There is also a bit of speculation involved. In there is an anticipation that one expects the value to go up in normal course of events. By your definition ""If I buy this equipment, I could produce more widgets, or sell more widgets,"" as an investment. Here again there is an anticipation that the widgets you sell will give you more return. If you are investing in stock/share, you are essentially holding a small portion of value in company and to that extent you are owining some equipment that is producing some widget .... Hence when you are purchasing Stocks, it would be looked as investment if you have done your home work and have a good plan of how you want to invest along with weiging the risk involved. However if you are investing only for the purpose of making quick bucks following so called hot tips, then you are not investing but speculating." "I'd argue the two words ought to (in that I see this as a helpful distinction) describe different activities:   ""Investing"":  spending one's money in order to own something of value.  This could be equipment (widgets, as you wrote), shares in a company, antiques, land, etc.  It is fundamentally an act of buying. ""Speculating"":  a mental process in which one attempts to ascertain the future value of some good.  Speculation is fundamentally an act of attempted predicting.   Under this set of definitions, one can invest without speculating (CDs...no need for prediction) and speculate without investing (virtual investing).  In reality, though, the two often go together.  The sorts of investments you describe are speculative, that is, they are done with some prediction in mind of future value.   The degree of ""speculativeness"", then, has to be related to the nature of the attempted predictions.  I've often seen that people say that the ""most speculative"" investments (in my use above, those in which the attempted prediction is most chaotic) have these sorts of properties: And there are probably other ideas that can be included. Corrections/clarifications welcome! P.S. It occurs to me that, actually, maybe High Frequency Trading isn't speculative at all, in that those with the fastest computers and closest to Wall Street can actually guarantee many small returns per hour due to the nature of how it works.  I don't know enough about the mechanics of it to be sure, though."
"For a non-ETF mutual fund, you can only buy shares of the mutual fund from the mutual fund itself (at a price that the mutual fund will reveal only at the end of the day) and can only shares back to the mutual fund (again at a price that the mutual fund will reveal only at the end of the day). There is no open market in the sense that you cannot put in a bid to buy, say, 100 shares of VFINX at $217 per share through a brokerage, and if there is a seller willing to sell 100 shares of VFINX to you at $217, then the sale is consummated and you are now the proud owner of 100 shares of VFINX. The only buyer or seller of VFINX is the mutual find itself, and you tell it that you ""want to buy 100 shares of VFINX and please take the money out of my checking account"". If this order is entered before the markets close at 4 pm, the mutual fund determines its share price as of the end of the day, opens a new account for you and puts 100 shares of VFINX in it (or adds 100 shares of VFINX to your already existing pile of shares) and takes the purchase price out of your checking account via an ACH transfer. Similarly for redeeming/selling shares of VFINX that you own (and these are held in an account at the mutual fund itself, not by your brokerage): you tell the mutual fund to that you ""wish to redeem 100 shares and please send the proceeds to my bank account"" and the mutual fund does this at the end of the day, and the money appears in your bank account via ACH transfer two or three days later.  Generally, these transactions do not need to be for round lots of multiples of 100 shares for efficiency; most mutual fund will gladly sell you fractional shares down to a thousandth of a share. In contrast, shares of an exchange-traded fund (ETF) are just like stock shares in that they can be bought and sold on the open market and your broker will charge you fees for buying and selling them. Selling fractional shares on the open market is generally not possible, and trading in round lots is less expensive. Also, trades occur at all times of the stock exchange day, not just at the end of the day as with non-ETF funds, and the price can fluctuate during the day too. Many non-ETF mutual funds have an ETF equivalent: VOO is the symbol for Vanguard's S&P 500 Index ETF while VFINX is the non-ETF version of the same index fund.  Read more about the differences between ETFs and mutual funds, for example, here." "What does ETFs have to do with this or Amazon?   Actually, investing in ETFs means you are killing actively managed Mutual Funds (managed by people, fund managers) to get an average return (and loss) of the market that a computer manage instead of a person. And the ETF will surely have Amazon stocks because they are part of the index.  I only invest in actively managed mutual funds. Yes, most actively managed mutual funds can't do better than the index, but if you work a bit harder, you can find the many that do much better than the ""average"" that an index give you." "Your broker, Ameritrade, offers a variety of Exchange Traded Funds (ETFs) that you can buy and sell with zero commission.  An ETF is like a mutual fund, but you buy and sell shares the same way you buy and sell shares of stocks.  From your point of view, the relevance of this is that you can buy and sell as many or as few shares as you like, even down to a single share.  Note that to get the commission-free trades on the available ETFs you have to sign up for it in your account profile.  Be sure to do that before you enter any buy orders. You'll want to start by looking at the Ameritrade's list of commission-free ETFs.  Notice that they are divided into different categories:  stocks, bonds, international, and commodities.  Which categories you pick from will depend on your personal investing goals, time horizon, risk tolerance, and so on.  There are lots of questions and answers on this site that talk about asset allocation.  You should read them, as it is the most important decision you will make with your portfolio. The other thing you want to be aware of is the expense ratio for each fund.  These expenses reduce the fund's return (they are included in the calculation of the net asset value of the shares), so lower is definitely better.  Personally, I wouldn't even consider paying more than about 0.10% (commonly read ""10 basis points"" or ""10 bp"") for a broad-based domestic stock fund.  For a sectoral fund you might put up with as much as 20 bp in expenses.  Bond funds tend to be a little more expensive, so maybe allow as much as 25 bp, and likewise for international funds.  I've never invested in commodity funds, so I'll let someone else opine on appropriate expense ratios for those. Once you've decided what funds you want (and have signed up for commission-free trades), all you have to do is enter the trade orders.  The website where you manage your account has tutorials on how to do that.  After that you should be all set. Good luck with your investing!" Canadian Couch Potato has an article which is somewhat related. Ask the Spud: Can You Time the Markets? The argument roughly boils down to the following: That said, I didn't follow the advice. I inherited a sum of money, more than I had dealt with before, and I did not feel I was emotionally capable of immediately dumping it into my portfolio (Canadian stocks, US stocks, world stocks, Canadian bonds, all passive indexed mutual funds), and so I decided to add the money into my portfolio over the course of a year, twice a month. The money that I had not yet invested, I put into a money market account. That worked for me because I was purchasing mutual funds with no transaction costs. If you are buying ETFs, this strategy makes less sense. In hindsight, this was not financially prudent; I'd have been financially better off to buy all the mutual funds right at the beginning. But I was satisfied with the tradeoff, knowing that I did not have hindsight and I would have been emotionally hurt had the stock market crashed. There must be research that would prove, based on past performance, the statistically optimal time frame for dollar-cost averaging. However, I strongly suppose that the time frame is rather small, and so I would advise that you either invest the money immediately, or dollar-cost average your investment over the course of the year. This answer is not an ideal answer to your question because it is lacking such a citation. I'v actually heard of this before, the idea is that you gamble across the spread. Most of these have a place in a risky asset class in portfolios. Think of it as the little bit of crack you do on the side of your vanilla life. "The Cash Credit from Unsettled Activity occurs because AGG issued a dividend in the past week. Since you purchased the ETF long enough before the record date (June 5, 2013) for that trade to settle, you qualified for a dividend. The dividend distribution was $0.195217/share for each of your six shares, for a total credit of $1.17 = 6 * 0.195217. For any ETF, the company's website should tell you when dividends are issued, usually under a section titled ""Distributions"" or something similar. If you look in your Fidelity account's History page, it should show an entry of ""Dividend Received"", which confirms that the cash credit is coming from a dividend distribution. You could look up your holdings and see which one(s) recently issued a dividend; in this case, it was AGG." You could certainly look at the holdings of index funds and choose index funds that meet your qualifications.  Funds allow you to see their holdings, and in most cases you can tell from the description whether certain companies would qualify for their fund or not based on that description - particularly if you have a small set of companies that would be problems. You could also pick a fund category that is industry-specific. I invest in part in a Healthcare-focused fund, for example.  Pick a few industries that are relatively diverse from each other in terms of topics, but are still specific in terms of industry - a healthcare fund, a commodities fund, an REIT fund.  Then you could be confident that they weren't investing in defense contractors or big banks or whatever you object to. However, if you don't feel like you know enough to filter on your own, and want the diversity from non-industry-specific funds, your best option is likely a 'socially screened' fund like VFTSX is likely your best option; given there are many similar funds in that area, you might simply pick the one that is most similar to you in philosophy. Very likely this refers to trading/speculating on leverage, not investing. Of course, as soon as you put leverage into the equation this perfectly makes sense.  2007-2009 for example, if one bought the $SPX at its highs in 2007 at ~$1560.00 - to the lows from 2009 at ~$683.00 - implicating that with only 2:1 leverage a $1560.00 account would have received a margin call. At least here in Europe I can trade index CFD's and other leveraged products. If i trade lets say >50:1 leverage it doesn’t take much to get a margin call and/or position closed by the broker. No doubt, depending on which investments you choose there’s always risk, but currency is a position too. TO answer the question, I find it very unlikely that >90% of investors (referring to stocks) lose money / purchasing power. Anyway, I would not deny that where speculators (not investors) use leverage or try to trade swings, news etc. have a very high risk of losing money (purchasing power).