What Is an Investor?

It's time for a definition. What EXACTLY is an investor? In this article, I stated that an investment IS a sacrifice. So if an investment is a sacrifice, what is an investor? The best answer I've come up with is that an investor is a person who earns a better return than they pay.

This means that an investor is a person who understands ROI. This also means that a person who buys a house with a 7% mortgage, and makes money renting out the property is an investor. A person who buys a home to live in? Only if that's cheaper than renting. A person who rents out a house for a loss? Not an investor! Unfortunately, I fit into that last example pretty well right now...

That also means that a person who buys stocks and waits for them to go up, or is selling now that they are dropping is NOT an investor. They're speculators, which is another word for a gambler. Same with the person banking on appreciation in their house. Not that there's necessarily something wrong with that, but this site is "dedicated to not daydreaming through life", as I say at the top... Let's see what's really happening here.

Most "investors" are really traders, and that is a game or a job, depending on how they approach it and whether they make money or not.

Funny thing, by this definition, Warren Buffett is an investor - as he buys undervalued assets that will pay a better return on his investment than he is paying (or could get elsewhere). But the people who own his stock (BRK-A or -B) are not, as it doesn't pay dividends and we're just expecting (or hoping) it will go up...