How Do You Differentiate Between Investing and Speculating?

[Anthony Gayden]

How Do You Differentiate Between Investing and Speculating?

I realized back when I first joined this website that what I consider to be speculation is what another investor may consider a wise investment. Just as an example I consider land flipping to be speculation, yet others have made a lot of money doing it. Another example would be the investors in highly appreciating markets on the coasts who buy properties that are cash flow negative because the appreciation gains are so great.

I also realize that certain types of deals only make sense as investments if you are starting with a large sum of money or are paying cash. Where is the line drawn?