Investing in the stock market and gambling at a casino are often compared and deemed to be very similar ventures. Both the difference between investment and gambling involve risk and choice in hopes of future profit. Investors and gamblers have to decide how much they are wanting to risk.

1. Gambling Vs Investing Reddit Personal Finance
2. Gambling Vs Investing Reddit Streams

In gambling you cannot stop your losses on a bet and get part of your money back. This is because investing is based on ownership of something tangible and gambling isn’t. Playing the odds. In the long run, when investing with professionals, the odds are in your favour. When it comes to gambling, however, the house (nearly) always wins.

• In gambling for every winner there must be a loser, whereas investing can benefit both the individual and society in general. Investing is widely regarded as the engine that drives capitalism. It tends to put money in the hands of those with the most promising and productive uses for it, and drives the economy gradually upward.
• Investing and gambling are very different. When investing you are adding funds to the capital market that then get used by entrepreneurs to create more value. You are rewarded when they are successful, but can experience a loss if they are not. Either way you are funding the attempt to add value to society.

Some traders typically risk between 2% and 5% of their capital base. Long-term investors often spread their money across different investments in order to try and minimize potential losses as a form of risk-management.

Risk-management in gambling is also proficiently sought after by professional gamblers. They look at whether odds are in their favor before they make a bet. A key comparable principle in both gambling and financial investing is to minimize risk while maximizing profits.

Difference Between Investment and Gambling

However, there is a huge difference between investing and gambling when it comes to stopping losses. In gambling, particularly in sports gambling, there are no loss-mitigation strategies due to the activity being so speculative.

Stock investors however can set up stop losses on a stock investment which is the simplest way to avoid unnecessary risk. If stock drops 10% below its purchase price there is an opportunity to sell that stock to someone else and still retain 90% of the risk capital.

However, if you put a bet on that states that Tottenham Hotspur Football Club will come first in the Premier League, you cannot get any money back if they come second. You will lose everything you’ve put on, which isn’t the case when it comes to stock investment. Gambling is mainly to do with pure chance, and there are a lot more loss-mitigation strategies when it comes to financial investments.
Time is another difference when it comes to comparing financial investments and gambling. Gambling is a time-bound event whereas financial investing can last several years if not longer. Some companies that pay dividends even reward investors that have purchased shares in the companies for risking their money.

As long as you hold onto their stock, companies can pay you money. But when you’re gambling, you either win or lose your capital – there is no in-between.

The way both investors and gamblers play the odds and try to look for an edge to help enhance their performance is a huge similarity between them. When it comes to gambling, particularly games such as blackjack and poker, players often study behavior, mannerisms and patterns in order to gain useful information which will help them when it comes to their own betting.

Stock investors study trading patterns by interpreting stock charts in order to accurately predict where the business might be going in the future. However there is a difference in terms of how much information is available to both investors and gamblers. Information is valuable when it comes to both sectors, but stock and company information is always readily available and in the public domain.

Gambling Vs Investing Reddit Personal Finance

Unsurprisingly, there is a limited amount of information when it comes to gambling. Sitting down at a poker or blackjack table in a casino gives you next to no information other than whispers about whether the table is hot or cold – all of which is relative to the other tables in the room. Essentially, gamblers go in almost blind other than from the information they can read and know about the players around them.

Although the idea that investing and gambling are somewhat similar isn’t untrue, there are far more differences that similarities when it comes down to aspects of information and time. Both involve risk and revolve around maximizing profit, but in general, investors have a much better chance at success than gamblers.

Gambling Vs Investing – What’s the Difference?

Since the financial crisis of 2008, many consider investing in the stock market a form of gambling. I was among this crowd that developed a negative view of investing. I felt like the stock market was one big online casino and that your money wasn’t safe. At least if you head to a casino to go gambling you’ll get free drinks…

Gambling Vs Investing – Gambling Pros and Cons

One thing that gambling has going for it is that the odds of each game are fixed. You know exactly what you’re getting when you approach a game to play. Most online casinos that have slots, poker, black jack, etc. are all required, by law, to implement the appropriate odds in their games to match their physical counterparts.

Another pro of gambling and online casinos are that they are fun – some times a little too fun 🙂 They can become addictive in a way – much like active day trading in the stock market.

What are the cons of gambling and online casinos? Well, in the long run the game odds are stacked against you. Ever heard the saying that the house always wins? Unless you work to develop some sort of gambling skill (counting cards, card playing systems, etc.) you WILL come out behind in the long run.

Can you make a lot of money gambling? I know a friend’s brother that made ~$75,000+ one year by gambling through an online casino at Texas Hold’em poker (before online gambling and online casinos were outlawed in the US). He also was invited free of charge to a Texas Hold’em 7-day cruise! So yes, you can make money with online casinos IF you know what you’re doing and you have a lot of practice!

Gambling Vs Investing – Investing Pros and Cons

When I talk about investing, I’m mainly discussing investing in public equities through the stock market. What investing has over online casinos and gambling is that over the long run, the market rate of return for the stock market is ~8%. This means that over the long run, if you keep your money invested long enough, you will come out ahead! Another pro of investing vs. gambling is that your dividends and capital gains are taxed as long term capital gains. This means that you’ll pay only 15% taxes. Gambling proceeds are generally taxed as income at a much higher rate. An additional pro that investing has going for it is that if you just decide to invest in market index funds, you’ll find it pretty easy to get started. And, you’ll net yourself some great returns.

Now, what about the cons of investing vs. gambling? Well, investing is pretty boring if done properly. Compared to online casinos and gambling, investing is about the most boring thing in the world – almost like watching grass grow. Also with investing, you may be limited by the liquidity of your investments. This means that if you’re investing in a thinly traded stocks that crashes, you may have a very hard time pulling your money out. Another con of investing is that there is a bit of a learning curve to get started if you decide not to use market index funds. With gambling and online casinos, you can login, click the slots, and be playing for free or with real money in less than a minute – it’s hard to beat that in terms of simplicity!

Gambling Vs Investing – Comparison Table

Here’s a simple table that brings a lot of the concepts discussed here together:

Gambling Vs Investing – Final Thoughts

Which is right for you? While gambling with online casinos can be a lot of fun, it really isn’t a strategy that I’d personally recommend to develop your wealth for the long run. Sure, online casinos and gambling are fun, but unless you’re willing to put in a lot of time to develop your gambling skills, you’re very likely to come out behind over the long run 🙂

This post published by Tom Shannon
Coming from Sheffield, Tom’s hobbies include writing, recording music, and creating video games. He also runs events to do with video games where people come to watch tournaments. Tom is currently studying in his final year at university

Gambling Vs Investing Reddit Streams