Gambling vs Investing

One thing for sure, investing and trading is not gambling otherwise there will be investing and trading houses otherwise known as casinos in the Nevada desert or anywhere across the world. Quite often, I have heard people told me that investing is as risky as gambling and one can lose a lot of money... well, not exactly. In fact, gambling is an activity based on luck. Nothing much, just luck, period. Poker players will bash me for this strong statement but let us be clear, poker is a different class of gambling. Even in poker, the general term used is gaming, hardly gambling. The gambling which I am referring is all that you see when you enter a casino.  Choose a colour, red or black and if it turns out in your favour, you win money. Pick a series of numbers and if you get them in the right order, you win money. Press the spin button and if you get a combo pattern, you win money. All of the mentioned require luck. The house always win and luck can run out eventually. 

TO GAMBLE IS TO PLAY YOUR STROKE OF LUCK

Unlike gambling, investing is not gambling. While everything requires a little a bit of luck, investing does not depends on luck. When one invests, he is buying into a piece of the company which he chooses to invest. If the company profits through their business with an increase in stock price, the investor profits from the increase in company's sales. There is no luck involved. All businesses are set out to profit, no business is set out to fail so we can be sure that everyone's ultimate goal is to make money. That alone sets the records straight and objectively. Choosing between heads or tails is gambling, choosing to invest into a company which sets out to eventually profit or change the world is being far sighted and a well worth investment. But can you invest into a wrong company? Definitely! As all investments, there are risks involved. Choosing the right company to invest can make a big difference. When choosing a perfect investible company, one may wish to research into its growth revenue, yearly returns, future products, potential for growth and the list goes on. Researching and comparing businesses is a knowledge that can be picked up. Investing into a financially strong company with quality management fundamentals would be a right choice when choosing over another company with slow growth and poor management with little future growth. Just look around you and take a step back to observe the daily household products that you are using, food that you eating, drinks that you are drinking, cars that are driven on the road, subscription movies that you are watching, these daily essentials can all be bought into. Like to drink Starbucks coffee? Like to eat McDonalds? Like to watch Netflix? Like to drive a Tesla? Like to brush with a Colgate toothpaste? Imagine yourself as a consumer of all these products versus the millions of people around the world using the same product as you do. These companies are making money as we speak! It doesn't really take rocket science to know what to invest... Then why is everyone not investing? The answer is simple, the fear of losing. The stock market is a risky place, it sucks you in and take money away from you. You have probably heard of someone losing money in the stock market and this is true... millions of people lost to the stock market but have you heard about the other millions who made money? The truth is, there is a "yin" and a "yang" in everything we do. For something to be good, something has to be bad. For something to look costly, one has to be expensive. So how do you get on the other side which makes money? Quite simply, knowledge. Ask anyone without a driving licence to drive a car and they will tell you that it is dangerous. Ask a newbie who just picked up mahjong if he is able to maintain a 100% win rate and he will tell you, no he doesn't. Ask someone who is cycling or swimming for the first time to ride down a ramp or swim across the pool and they will tell you that you are crazy. My point is... investing takes time and having the knowledge to master investing is inevitable. 

EVERYTHING IS DIFFICULT IF YOU DO NOT KNOW HOW

Learning how to drive is only the beginning, learning how to drive a F1 car or a bus is entirely different. There are approximately 41000 stocks listed in the stock market worldwide, learning how to choose the right investment is an art. Learning how to invest properly is not by luck. I have never heard of someone becoming a millionaire by saving money in the bank. As a businessman, I have always preached that "in order to earn, we must first know how to spend." This is true for any entrepreneur, one has to invest time and money before being able to profit from any industry. Learning how to spend is critical. As a beginner to investing, there are tons of information out there which can always overload your thoughts. When one has information overload, it often lead to inaction. Inaction is the root of most problems due to our natural instinct of "playing it safe" and this eventually turns into procrastination. Which is the reason why most people do not start their investment journey. To most, setting up a trading account can be tedious, working out your finances can be cumbersome, reading up information can be lengthy and the excuses to put thoughts into actions are drastically delayed. The best time to start any investment is always today.

About The Contributor

Ben is not financially trained. He is not a certified financial planner and he does not sell any insurance or investment plans. He is not financially motivated by any entities to produce this blog. He just want his friends to know more about money management and not have anyone fall between the social cracks. Nope, he is not a millionaire though he aims to be financially free before 50 years old.