I recently came across a top trader in India who was proudly boasting about making 50% profits in the stock market. On the surface, that’s an extraordinary achievement — a level of gain that most traders may never experience. However, despite such an impressive figure, this trader was still at an overall loss.
The reason is simple but often overlooked: trading is an active income, much like a job or running a business. It demands your time, energy, and infrastructure. When calculating the real profitability of trading, you must also factor in tax implications, brokerage fees, operational expenses, and the opportunity cost of your time.
For example, let’s take a capital of ₹10 lakh. Even if a trader makes a 50% return in a year, after deducting taxes, expenses, and other costs, the actual net profit might only be around 22%. You can check this in detail using our trading vs investing profit calculator.
The Smarter Alternative — Long-Term Investing
As the calculation shows, instead of spending long hours on active trading, he could have simply chosen passive long-term investing and earned an easy 30% return — without the constant stress and hard work. In fact, in the past two years, long-term investing strategies have delivered returns in the range of 100–150%, though for realistic planning, we consider an average of 30% annually.
This is exactly why great investors like Warren Buffett and Ramesh Damani prefer investing over trading. They understand that the real wealth comes from owning quality businesses for the long term, allowing compounding to do the heavy lifting, rather than constantly trying to beat the market day-to-day.
