All you have to do is re-invest your earnings into the same investments that are producing gains, and your money will grow faster and faster. On the other hand, in order to do the same thing gambling, you would have to win money, and then win more money with the money you already won, and so on.
And since the odds are not in your favor, this is an extremely unlikely scenario. And by unlikely, I mean nearly impossible. If you really want to improve your odds with investing, you have the option of diversifying your investments. For example, you could invest in mutual funds, individual stocks, real estate, and much more.
This is a great way to reduce the likelihood of losing money, and increase your ability to build wealth. This is not an option when it comes to gambling. Since every gamble carries a high risk of losing money, diversifying your bets would likely only make your odds worse.
The fifth, and my personal favorite, reason why investing and gambling are different, is that humans play a prominent role in the outcome of investments. For example, when you invest in a company on the stock market, you are putting your money behind executives, employees, and other investors that all have a vested interest in the company earning a profit.
And with all those people working hard to reduce costs, innovate, and grow the company, your likelihood of earning interest on your investment is very good. You should be fearful of speculating or gambling, because doing so forces you to take outsized risks.
You base your hopes of return on chance, rather than reasonable expectations. Investing, on the other hand, is a disciplined, calculated and tested approach built on facts.
In he was named to Investopedia's Top Financial Advisors list. Skip to header Skip to main content Skip to footer. Home investing. Sydlansky, CFP. Using Other Investment Accounts A retirement account is a great place to start investing.
Building a Business As a business owner, I am trying to grow the value of my company. This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. About the Author. Paul V. Most Popular. Tax Breaks. February 25, Dividend growth, not yield, typically drives outperformance. Thus, you're getting more than just security from these safe dividend stocks.
October 22, Financial Planning. Hence, people often mistake investing with gambling. Investing in mutual funds or shares or any asset for that matter does provide us with ownership of the asset. In gambling, when you put your money, all you receive is more money or no money. There is no ownership of an asset that comes at the end of a gambling transaction. However, in investing, one can claim ownership of an asset. Investing is usually done in the long run.
For a period, more than a year in case of equity. The only exception to this case is investing in debt funds, short term bonds, and money market instruments. Gambling or trading is done during trading hours, and sometimes it can extend to a couple of weeks or months but nothing more. Gambling usually is based on a principle of going all in.
By taking a risk, the person is either rewarded or goes empty-handed. There are hardly any chances of getting back the money lost in gambling or trading. In investing, one can always switch investments from one fund to another or one asset to another and recover the lost money with it. In gambling, if you lose, you lose it all. One can recover the money lost in trading or gambling through more trading or gambling, but only when additional money is introduced to continue the same.
While investing, one can withdraw their investments even it is a loss and invest it elsewhere. No one loses the entire money invested. They face losses.
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