Gambling and Investing: Honestly is There Any Difference?

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I have read a lot of post concerning this topic and I have heard the opinions of a lot of folks and there are a lot of people on both side of the divide, but if I were to ask you, what would you say? They are different, they are not? Well, it really is a matter of personal opinion, but I am just going to highlight a few points that you probably should consider while deciding or I might just be giving you my own opinion of the whole thing.

What is Investing?
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Image Source: teen financial freedom.com
According to wikipedia 'To invest is to allocate money with the expectation of a positive benefit/return in the future. In other words, to invest means owning an asset or an item with the goal of generating income from the investment or the appreciation of your investment which is an increase in the value of the asset over a period of time. When a person invests, it always requires a sacrifice of some present asset that they own, such as time, money, or effort.' While according to https://www.google.com/url?sa=t&source=web&rct=j&url=https://languages.oup.com/google-dictionary-en&ved=2ahUKEwif-6TMwvLzAhUI_BQKHdmwCtEQvecEegQINRAK&usg=AOvVaw3kNBXVjbAIAFeyFQVCJmJF 'to invest is to 'put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit'. put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.

Key Points on Investing

  1. The use of money to acquire assets

  2. These assets could come in different forms (money, financial scheme, shares, property, commercial ventures etc.)

  3. The aim is to make profit off the acquired asset.

  4. The expectation is for a positive return in the future.

  5. It requires giving up a current asset you own in acquisition of the asset you want to get ( which you expect to profit off of in the future).

  6. It requires analysis, which some will argue as speculation.

What is Gambling?
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Image Source: thekatynews.com
According to britannica.com'gambling, the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, a contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor’s miscalculation.' While according to wikipedia'Gambling (also known as betting) is the wagering something of value ("the stakes") on an event with an uncertain outcome with the intent of winning something else of value'.

Key Points on Gambling

  1. It involves an uncertain event.

  2. Wagering is involved.

  3. The outcome depends on chance.

  4. There must be a reward.

  5. There's an amount of speculation.

Having outline both, it is worthy to mention that when "investing", it can be classed high risk , when the possibility of loss is high and usually when the reward is beat, while it is low risk if the possibility of loss is low and the reward margin is small. Having said that, one could argue that these two things have a lot in common.

Similarities

  1. For starters, both involves an element of risk and return. The investor believe his asset will increase in value, as well as the possibility of it decreasing, while the gambler expect event to happen according to his speculations, knowing fully well they might not.

  2. Both involves sacrificing a valued asset.

  3. Both involves using speculative means, such as data-driven analysis to make predictions on possible outcomes before indulging in them.

  4. They both have mean of reducing the risks involved while increasing accuracy.

  5. Both can result in addiction.

With these similarities, one could effectively argue that what people term gambling is nothing more than a high risk investment.

Differences

  1. Gambling usually involves speculating on events, while investing involves the acquisition of an asset.

  2. Gambling is usually considered a youthful exuberance while investing up until recently was considered a thing for the old and middle aged.

  3. Gambling is frowned upon, while investing is encouraged.

  4. There's time constraints unlike investing

Conclusion (for me)
But having look at the facts, doesn't it seem to you like they are just two side of the same coin really? I mean, I watch gamblers especially sports bettors and I can categorically tell you that some of them put as much effort into analysing data to come to a good predictions as a crypto trader put into analyzing market movement to know what coin or crypto to buy. Having said all this, I argue that what we call gambling is high risk investment and what we call investing is a low risk investment basically a less risky gamble.

This article was first published by me on read.cash

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