InvestingGambling Vs. Picking Stocks
Although some people may argue that investing in the stock market is the same as placing bets at the race tracks, these two activities are actually very much on polar ends. To clarify matters further, let us first define gambling; and then investing in the stock market.
Gambling For Profits
Some gamblers claim that they play the field out of fun, but that statement can be misleading. Exactly what the term "fun" is for most avid gamblers is when they make a killing at the race track, at the casino tables and even at the slot machines. In other words: gambling is fun when they win, but not much fun when they lose.
In a nutshell, gambling is when a person wagers something of value (money, material possession, service, etc.) on a particular event with hopes of taking home a profitable exchange, or at least a return of the original wager amount. If you dare a friend to jump a puddle for a dime, hoping that either he would not clear the puddle or he would not make the attempt, then you are already gambling even if the amount is pretty small.
The same is true when you put a $20 bill in a slot machine and pull the handle. You are hoping to get something out of your money, preferably something more than strained muscles from pulling down the machine handle much too often.
Investing In Stocks For Profit
People are also investing in the stock market to gain profits. Brokers and traders usually handle assets or securities. To make a very complicated financial market less complicated, let us just say that people who dabble in this kind of trade buy stuff while its price is at its lowest, hold it for a period of time, and then sell the stuff when its market price is several degrees higher. This is the way brokers or traders earn their keep.
Similarities Of Gambling And Investing In Stocks
Despite what many think, both gambling and investing in the stock market are legal activities at least in most countries. There are however, some forms of gambling that are illegal; but there are also some forms of trading that are illegal in nature. There are also committees for both activities overseeing the works like the gaming (or gambling) commission, and several types of financial regulatory boards.
These two activities are also fraught with risks, and usually, the riskier the venture, the greater projected profit should be. There is also that element of "loss" since we all know that many gamblers and financial investors lose more stakes than those who practice conservative business measures.
Differences Between Gambling And Investing In Stocks
Investing in stocks may be a risky venture, but there are always safe and conservative measures to work with in the trading arena. Some investors prefer speculative trading, which is probably the riskiest form of trade in the financial markets, but there is a greater population of investors who prefer quiet investments with growing yearly interest. A good example of that would be people who dabble in mutual funds.
Investing in mutual funds means putting down money on an erstwhile money-generating company while making sure that part and parcel of the money it earns go into something either environmentally or socially productive ventures.
You definitely cannot say the same for gambling, although many people might argue that a portion of the money does go to a good cause. Gaming commissions donate money to charitable institutions, but this is more for tax cut reasons.
Also, there are no conservative measures when it comes to gambling. Its either you win or you lose. Even in hedge betting where gamblers stake on different players in order to cover all bases, there is definitely no yearly interest growth to look forward to.