Image Credits: Images Money (TaxRebate.org.uk) via Flickr with CC License
Sense of expectations and hopes for future profit are both present in the whirlwind world of investing and gambling. Although they are seemingly similar as both involve the risk of money, they have undeniable major differences. From the basic definition to the societal view, here is a concise comparison between investing and gambling…
1. DEFINITION
Dictionary.com differentiates the two as:
a. Investing: To commit capital or money to gain a financial return.
b. Gambling: To bet on uncertain outcome, much like a contest.
If you understood what the above definitions entail, you will come to the conclusion that the difference between these two is based on the determinability of the outcome. In investments, you place your hard-earned cash at a risk of loss where the odds are usually favorable. This is because purchasing government bonds are more predictable and secure.
While in gambling, you place your hard-earned cash at a risk of loss where the odds are usually unfavorable. This is because the gambling games are devised so as to bring more winnings to the casino itself.
2. STRATEGY FOR FUTURE GOALS
If you are torn between investing and gambling as a means of strategy to build your future goal such as a Retirement Fund then, gambling may not be it. A long-term plan such as this takes sufficient research and favorable odds. And, that may not be present in gambling. In investing, systematic approach is taken from risk management to economic literacy. While in gambling, risk-seeking individuals conduct little to no research and are fueled by their momentary emotions.
3. SOCIETAL VIEW
Even if gambling is typically part of the Asian culture, some of its by-products include well-documented unpleasant consequences such as filing for bankruptcy or having hefty debts from Loan Sharks. On the other hand, investing is a socially acceptable engine that drives capitalism. Investors not only place their money on the companies but they also help them to accomplish their goals and pull the country’s economy to the top.
I shall close this post with a quote by Kenneth Cranham:
“Buying a particular vintage because everyone tips it and then waiting for it to mature is like gambling. The thrill is in placing the bet. Once the race is run or the match is played, you’ll either win or lose. Until that happens, you’re caught in this wonderful, agonising sense of expectation.”
Image Credits: Chris Potter (www.stockmonkeys.com) via Flickr with CC License
