Is Investing Just Gambling? General, news for Ireland, Blog
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An age-old question, and, while some might imply that these two are vastly different, the truth is that, in essence, the contrast isn’t that pronounced.
You can’t deny that most gamblers are a form of speculative investors, they put up money on uncertain events in hope that their prediction will come true and that they’ll gain wealth. They make educated guesses based on incomplete information.
But, as we all know, there are no guarantees in life, and sometimes things don’t pan out, however likely they might seem. So, what are these two activities and how do they exactly differ?
Gambling
When you gamble you stake something on a contingency that’s heavily reliant on chance. Gamblers are in the risk assessment business; the odds are their way of weighing the risk capital versus the risk-reward. If the odds are favorable, they’re more likely to place a bet.
However, in every form, the odds are stacked against you. In casinos, you’re playing against “the house” and you can’t win long-term as that would be a mathematical improbability. Maybe, that’s why today people prefer playing at an online casino. It cuts back on their investment of time and energy, they can just gamble on their phone, and see what fate has in store. If it’s that big short-term win they’re after.
Online gambling is a $60 billion industry, and it’s all about ease of use and advanced interactive games. Today, gambling isn’t just gambling, as many slots offer skill-based bonus rounds, where chance doesn’t get a say, you do. And with opportunities to land progressive jackpots as well as participation in loyalty programs, the choice is obvious.
The case is similar with online sportsbooks too. While some of the best betting sites, which can be found at https://www.safebettingsites.com/ie/ can provide you with the best odds and services, the luck factor does play a major role. It is worth noting that with online sportsbooks, you can rely a lot more on your knowledge and thus, predict outcomes of sports events, while online casinos are based purely on luck.
Investing
Investing is allocating funds to an asset, such as a stock, with the hope that it will generate profits, a return. The basis is the balance of risk-return, low risk generally means low returns, while higher returns are accompanied by high risk.
You’ll often hear of diversification across asset classes, which in its core is a risk management strategy, one that helps you minimize potential losses. Something that’s not allotted to gamblers. Investors also study trading patterns by interpreting stock charts, trying to find out what direction the stock is heading towards.
It’s also key to understand that when you invest in a stock you own a piece of the company and you might get reimbursed for it in the form of a dividend.
Difference Between the Two
The key principle in both is to minimize risk and maximize profits. You cannot win long-term in gambling, but this doesn’t mean that the investor does, it’s just that their odds get better with time.
Gamblers are also at a disadvantage when it comes to mitigating losses and access to information. They have no real way to limit what they lose, but investors do. Investors can also lean on a company’s history, their previous earnings, financial ratios, research these things before buying a stock. While, gamblers have fewer sources and amounts of quantifiable information at their disposal, thus, their educated guesses aren’t as educated.
The only thing that these two have in common is the risk of losing money. But, as you can see, in investing, you will have a lot better control of your funds.
