On the surface, investing and gambling seem to be quite similar in how they work. You use your money to bet on an uncertain outcome and hope that your move was the correct one. In both cases, you’re facing either human competitors or the system itself. However, these similarities are superficial in nature. To help you understand the divide better, here are some of the key differences between investing and gambling.
In gambling, the longer you play, the lesser your advantage over the systems gets. On the other hand, the stock market rewards long-term commitment over short-term deals. It’s easier to lose an entire fortune in gambling, as investors can always sell their falling stocks to at least regain a part of their money.
Also, it’s much easier to study the investor market based on previous performance and data than it is to predict winning moves in gambling. Finally, gambling earns you money when you win, while investing can be a source of passive income. Explore the ideas below and see for yourself just how different these activities are!
In Gambling, the Longer You Play, the Less of an Advantage You Have
The majority of gamblers win a small portion of their original stake. This is because they have to compete against a house edge which you can learn from AU casino reviews, that over time gets higher than the odds that they actually have over the systems.
Also, every next move can be your last if you pick a wrong choice, or simply your luck runs out. In fact, many of your wins are early on to lull you into a false sense of security and convince you that you’re on a winning streak. However, after a while, you start losing more and more.
Investing works in a completely different manner – it favors the long-term game. Short-term investments are often the riskiest, as they involve a very high element of unpredictability. To give you an example, it’s nearly impossible to predict if the stocks of a megacorporation will fall the next month.
It’s much safer to make long-term predictions and investments. A construction company that plans to build a new office tower is very likely to deliver on its promises and, therefore, a less risky investment option.
Of course, the stock market is a risky business, and you can end up losing money even if you invest for the long haul. However, if you follow the right strategy and know what to invest in, you’re still less likely to lose money than in casino games.
It’s Easy to Lose Your Fortune in Gambling, But Investors Can Always Sell Their Falling Stocks
Gambling is often a zero-sum game, which means that when someone loses, the other person wins. The moment you put your money on the table, there’s a certain probability that you will go home with nothing. However, in the stock market, you can always sell your falling stocks.
A loss at a high-stakes game of poker can easily set you back tens of thousands of dollars. You’ll most likely never see them again, as trying to win back your losses rarely succeeds. On the other hand, if your stocks start to fall, you can immediately stop holding them and sell everything to minimize losses. Depending on how fast you are, you can even regain most of your invested money.
It’s Easier to Study the Investing Market Than to Predict Winning Moves in Gambling
The investor market is very transparent, and you can always check out how well certain stocks or ETFs have done over the past months and years. You can also look at charts and analyze the prices of some instruments.
Although it’s virtually impossible to predict if a stock will rise or fall in the next hour, broad trends can be identified and used to predict outcomes. Many investment areas, such as housing, are very stable long-term and require a serious economic crisis to upset.
On the other hand, gambling relies on two extremely unpredictable elements – random number generation and human nature. The RNG used in many online slots ensures that the outcome of your every move is truly random. Human nature, on the other hand, makes any predictions very inaccurate, especially in games like poker, where bluffing and reading body language matter.
Gambling Earns You Money When You Win, While Investing Can Be a Source of Passive Income
Gambling is a game and requires you to win in order to make money. You need to actively beat your opponent, human or otherwise, to get your winnings. The longer you go without a win, the worse your financial situation becomes.
On the other hand, investing is a way to ensure long-term stability and earn some passive income. Thanks to interests, your money will grow even if you don’t actively trade it. Just make sure that you have an investment strategy in place and that you’re comfortable with the asset class you’re investing in.
In Conclusion
As you can see, gambling and investing are only superficially similar. The fact is that, unlike in investing, the more you play gambling games, the higher the chance of losing money. In investing, the long-term game is much more profitable.
Moreover, you rarely get to win back your losses in gambling, whereas falling stocks sold quickly can easily return a part of your investment. Investment is also more tied to the historical performance, and therefore the outcome is usually easier to predict.
Finally, investing gives you passive income, while gambling relies on your wins only to earn money. Hopefully, now the differences between investing and gambling are much clearer to you!
