Investing is a long-term investment strategy where you invest money in an asset or company that you believe will increase in value. To make intelligent investments, investors need to know how the stock market works and what are the risks involved with investing. In investing, you can make use of the power of compound interest. This means that your money will grow over time and give you more money to invest in the future.
Gambling is when you put your money at risk without any guarantee that the outcome will be profitable for you. Gambling involves taking chances and hoping that the work will be better than what you would have gotten if you didn’t gamble your money. Knowing how much risk you’re willing to take before gambling for fun or profit is essential because many different gambling games are available today, such as lottery tickets, sports betting, casinos, and horse racing.
Difference between Investing and Gambling
| Investing | Gambling | |
| Risk: | Funds are committed to an asset, wherein risk is low with anticipation of average or above average market return. | Funds put on bets taking higher risks to achieve high returns. |
| Element of excitement: | Generally, not present and is certainly not the driver of investment decisions. | The element of excitement is a significant driver for indulgence in gambling. |
| Basis of decision: | Investment decisions are generally based on some fundamental analysis and the strength of the investment instrument. | Decisions are primarily based on unscientific and unfounded ideas of making super abnormal gains in a short time. |
| Examples: | Funds are invested in shares, bonds, and financial securities. | Horse races, lotteries, card games, etc. |
Further, it needs to be understood that speculation and gambling are not similar and can be differentiated on the simple fact that belief tries to take advantage of short-term anomalies that can exist in the market for speculators to exploit, while gambling is purely betting on odds without any reasoning and scientific law.
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