Every other week money is deducted from my paycheck to purchase mutual funds inside my 401k, every so often I dump money into an individual investment account to purchase stocks, mutual funds, and ETF's.
The myriad of commercials I see on TV every day, the multitude of articles I read on the internet, as well as my discussion with friends refer to this activity as "investing."
My question is, in each of these scenarios an individual typically purchases some sort of security (a stock, a mutual fund, an ETF, or as I guess some bonds can be traded, bonds) that they hope to sell to a different person or entity at a later date for a higher value. Is this activity speculation, or investing? Am I wrong when I correct my friends and refer to their activity as speculation, not investing?
My mind considers situations like "If I buy this equipment, I could produce more widgets, or sell more widgets," as an investment. I.e. an investment is something that allows you to produce more, earn more, sell more, etc., which of course has risk associated with it.
Trading stocks, mutual funds, ETF's, or buying a commodity like "gold" to me seems like a 100% passive activity where you hope and plan that in the future someone will give you more money for your stock, mutual fund, ETF, or gold, than you paid for it. This to me seems like speculation.