By gambling you are taking a big chance that you might either win a lot of money, or you might lose a lot of money. You are playing a game and you don’t know what’s going to happen.
Some people play with investing like a game. When you invest your money, you believe that the company you invest in will be successful and the investment will increase in value. Some people who look at investing as a game want to make money, but they also enjoy themselves. Others just do it to make money. Why don’t the others look at it as a game?
Investing is not a gamble. Some types of investments are so obviously not like gambling. For example, you may decide to put some money into government bonds. You are guaranteed the money back plus interest. It can’t be a gamble if you know you’re going to get money back. There is the smallest chance you won’t get your money back, but that would have to be because the government is in a lot of trouble, and I think you’d have more to worry about than getting your money back.
What about stocks? How does the stock market work in a way that’s not gambling? Buying stock means buying part ownership in a company. You invest in that company with expectations that they will make a profit and you’ll get paid dividends and/or the value of the stock will increase and you could sell for capital gains.
When you put money down on a football game or when you give your cash to a casino, you own nothing. Your earning power does not depend on the success of anything or anyone. It depends simply on chance.
Investing is another way to earn an income. When you invest, your money is earning money, not simply taking a chance on itself. If you ever fall into a large sum of money and you aren’t sure which way to go, remember that investing is much less risky and could earn you a lot more money over the long run.
Let’s say you inherit $10,000 from a long lost Uncle. If you have a chance to gamble your money and double it, you could have $20,000. You could double it again and have $40,000 and so on and so forth. The problem is that the possibility that you’ll even double it the first time is slim to none. If instead you invested it into the stock market and got an average 8 percent return and didn’t touch it for 30 years, you would have about $100,000. Which would you choose?
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