There are a number of people who look at investing as gambling. This is a distorted perception that hinders a number of individuals from the financial returns of sensible investment. Prudent investment is normally profitable in the long-run.
Furthermore, gambling and investing have apparent similarities but there is still a principle difference between them. On one hand, investing is putting money to use through the purchase of something that brings returns such as income or interest. Gambling on the other hand is about playing at a game of chance for a reward. It risks money or valuables and mainly relies on luck.
The reality of gambling and investing are completely different. In casino gambling, for instance, the casino has the upper hand over the gambler. In the end, the player is expected to lose. However, the chances of winning vary from one casino to another but they all purpose to achieve one thing: not to lose. The player is therefore at a disadvantage when playing casino games since the percentage rate of winning is very low.
Similarly, in bets on horse racing and sports betting, the likelihoods are weighted against the one who bets. Staking on horses amounts to a bet against other bettors since the chance of winning relies on the amount of money staked on each horse.
What happens is that the race track gets a share from the bets on winning horses. Subsequently the money is divided among those who bet on horses. However, the bettor normally wins about one-third of the time.
In the same way, sport betting requires the bettor to put an additional sum over and above the bet amount. The house retains this whether the bettor wins or loses. In addition, the number of points a bettor has to gain in any game, be it football, baseball, hockey or basketball, decreases his chances of winning. This means that even if the bettor’s team wins but does not exceed the points given by the bettor, he loses on that game.
In short, gambling is meant to be a loss for the player who is placed at a drawback from the start. The possibility of winning is therefore small and random.
Unlike in gambling, you own something when you invest. In investing, you can own shares of a company or other securities. When the company makes profit and pays-out dividends, you also benefit from it. In addition, if the price of stocks you own rise, you can sell then at a gain.
There is however the risk of losing too since the stock market swings up and down. Mostly, the market has been rising over the years resulting in profits.
Moreover, investing in highly-rated corporates and government bonds has been profitable in the long run. This kind of invest is also linked with minimal risk. Besides, investing in select real estates, especially residential housing has proved worthwhile.
In addition, the past performance-trend does not guarantee positive returns in the future. It is better to caution your investment through having a diverse portfolio that comprises of a range of products. You will realise that the total of the profits and loses is not negative.
Investing is certainly not gambling. Whereas gambling is a no-win affair, investing gives you a reasonable opportunity of making returns. Some investments may fail or even be a catastrophe, just in a similar manner to losing all you money at the roulette table. However, investing is more sound than gambling.