Gambling and investing are believed to be two sides of the same coin, but is this really the case or people just making vague assumptions on both terms?
We know for a fact that gamblers do at times call them investors and we also know that investors have admitted that at times they feel like gamblers. Does this mean that gambling and investing are the same?
Today, we want to look at gambling and investing and come up with a conclusion on the matter. Are gambling and investing the same or are they two totally different things.
Gambling and Investing: Definition of Terms
When dealing with the two terms like gambling and investing, it is vital to be able to define the two terms. And from there you will have to be able to draw out the differences and similarities.
What is gambling?
Gambling is more than just playing online casino games as many people would think. It has been defined by staking something on a possibility. When you gamble, you are risking money on an event or a game that has an uncertain outcome and is based on chance.
What is Investing?
Investing is the act of gathering funds or capital rather to an asset like stocks with the expectation of generating an income or profit.
Similarities
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Diversification
Gamblers like investors will try out several online casino or gambling activities before they decide on the one that they have to play. And with investing, it is very rare to find an investor putting all their trust in a single investment.
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Basing Outcomes on Past Events
Before anyone makes an investment, they want to know all about the company or product they are investing in. Where they started as well as where they have been. And with gambling, especially when you are betting on sports you want to the history of eth team or the player you are placing the bet on.
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Risk Factor
One of the major reasons why investing in equated to gambling is the aspect of risk. Both gambling and investing revolve on risk. And both believe in the simple principle of high risk = high return.
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Patience
For both gambling and investing, there is a need for patience. Investments, like gambling, will need the key player to be patient, as the outcomes are in most out of their hands.
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Timing is of the Essence
With investing, timing is of the essence as it is with gambling. When investing, there are times when the stock prices soar and there are times when they fall. Therefore as an investor, you will need to make sure that you make your investment at a time that will give you the most in terms of return.
The same is true for gambling, the bettor’s relay on the odds to make a bet. There are times when odds will be in favour of the bettor and at the same time, there are times when they won’t.
Expect bettors to know that they need to make bets when the odds best suit them and will give them more in terms of return.
Differences
Just as there are similarities between gambling and investing, there are also differences between the two.
Mitigating Loss
In gambling, when you make a bet and you lose, you have lost everything that you wagered. However, when it comes to investing, there are several ways that you can prevent total losses on your part.
Period of Return
Gambling is time-bound, which means that when you are betting on a race, the results will be out as soon as the race is over. Whereas with investing, returns can be seen after several years.
Costs
Gambling, in general, is a lot cheaper than making investments and in gambling, you are most likely to see returns after just a few hours of play. Investing, on the other hand, can take up a lot of time and resources, which will then lead to costs piling up.
Conclusion
Wrapping it up, gambling and investing have more similarities than they do differences, however does not mean that they are the same thing. The two follow the same principles, but in general, they are different. However, this will not stop gamblers from calling themselves investors and likewise, it will not stop investors from calling themselves gamblers as well.
FAQs
Is gambling like investing?
What are the similarities between gambling and investing?
Some of the major similarities are:
- Diversification
- Basing Outcomes on Past Events
- Risk Factor
- Patience
- Timing is of the Essence
What are the differences between investing and gambling?
The major differences are:
- Mitigating Loss
- Period of Return
- Costs