1. Another key difference between investing and gambling: You have no way to limit your losses. If you pony up $10 a week for the NFL office pool and you don't win, you're out all of your capital.
2. 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%.
3. All one needs for gambling is a lot of good luck on one’s side. Choose carefully! Hopefully you have a clear understanding between the differences among Trading Vs Investing Vs Gambling now. Feel free to let us know your thoughts in the comments section below.

1. Difference Between Investment And Gambling Comparison Chart 2020
2. Difference Between Investment And Gambling Comparison Chart 2019
3. Difference Between Investment And Gambling Comparison Chart Pdf

Day trading is a cousin to both investing and gambling, but it isn’t the same as either. Day trading involves quick reactions to the markets, not a long-term consideration of all the factors that can drive an investment. It works with odds in your favor, or at least that are even, rather than with odds that are against you.

Gambling is time-bound The concept of time is another key difference between stock investing and gambling. Gambling is a time-bound practice, but stock investing can last several years. In gambling, once the game or hand is over, your chances to make more profit from your wager are closed.

Still, the three activities overlap. Many day traders also invest, and some came to trading after years of watching the markets as an investor. In addition, more than one day trader claims that good poker skills are useful for understanding market psychology, and many day traders can point to a winning trade that was made for no particular reason at all. To help you keep straight the differences between day trading, investing, and gambling, this article explains which is which so that you can better understand what you’re doing when you day trade. After all, you can increase your chances of success if you stick to the business at hand.

Investing is slow and steady

Investing is the process of putting money at risk in order to get a return. It’s the raw material of capitalism. It’s the way that businesses get started, roads get built, and explorations get financed. It’s how our economy matches people who have more money than they need, at least during part of their lives, with people who need it in order to grow society’s capabilities.

Investing is heady stuff. And it’s very much focused on the long term. Good investors do a lot of research before committing their money because they know that it will take a long time to see a payoff. That’s okay with them. Investors often invest in things that are out of favor, because they know that, with time, others will recognize the value and respond in kind. In the long run, investing is a positive-sum game; on average, investors will make money, the only question is how much.

One of the best investors of all time is Warren Buffett, chief executive officer of Berkshire Hathaway. His annual letters to shareholders offer great insight and are a great introduction to the work that goes into choosing and managing investments.

What’s the difference between investing and saving? When you save, you take no risk. Your compensation is low; it’s just enough to cover the time value of money. Generally, the return on savings equals inflation and no more. In fact, a lot of banks pay a lot less than the inflation rate on a federally insured savings account, meaning that you’re paying the bank to use your money.

In contrast to investing, day trading moves fast. Day traders react only to what’s on the screen. There’s no time to do research, and the market is always right when you’re day trading. You don’t have two months or two years to wait for the fundamentals to work out and the rest of Wall Street to see how smart you were. You have today. And if you can’t live with that, you shouldn’t be day trading.

Trading works fast

Trading is the act of buying and selling securities. All investors trade, because they need to buy and sell their investments. But to investors, trading is a rare transaction, and they get more value from finding a good opportunity, buying it cheap, and selling it at a much higher price sometime in the future. But traders are not investors.

Traders look to take advantage of short-term price discrepancies in the market. In general, they don’t take a lot of risk on each trade, so they don’t get a lot of return on each trade, either. Traders act quickly. They look at what the market is telling them and then respond. They know that many of their trades won’t work out, but as long as they measure proper risk versus reward, they’ll be okay. They don’t do a lot of in-depth research on the securities they trade, but they know the normal price and volume patterns well enough that they can recognize potential profit opportunities.

Trading keeps markets efficient because it creates the short-term supply and demand that eliminates small price discrepancies. It also creates a lot of stress for traders, who must react in the here and now. Traders give up the luxury of time in exchange for a quick profit.

Speculation is related to trading in that it often involves short-term transactions. Speculators take risks, assuming a much greater return than may be expected, and a lot of what-ifs may have to be satisfied for the transaction to pay off. Many speculators hedge their risks with other securities, such as options or futures.

Gambling is nothing more than luck

A gambler puts up money in the hopes of a payoff if a random event occurs. The odds are always against the gambler and in favor of the house, but people like to gamble because they like to hope that, if they hit it lucky, their return will be as large as their loss is likely. It’s a zero-sum game with one big winner – the house – and a whole bunch of losers.

Some gamblers believe that the odds can be beaten, but they are wrong. (Certain card games are more games of skill than gambling, assuming you can find a casino that plays under standard rules. Yeah, you can count cards when playing blackjack with your friends, but doing so is a lot harder in a professionally run casino.) They get excited about the potential for a big win and get caught up in the glamour of the casino, and soon the odds go to work and drain away their stakes.

There is some evidence that day traders are gamblers. For example, in 2016, some researchers at the University of Adelaide published the paper “Day Traders in South Australia: Similarities and Differences with Traditional Gamblers.” They found that almost 91% of the day traders in their survey were also gamblers, and that 7.6% of those also had a problem with gambling, significantly higher than among people who were not day traders. The authors concluded that many day traders are actually gamblers who have added the financial markets to the games that they play.

Trading is not gambling, but traders who aren’t paying attention to their strategy and its performance can cross over into gambling. They can view the blips on their computer screen as a game. They can start making trades without any regard for the risk and return characteristics. They can start believing that how they do things affects the trade. And pretty soon, they’re using the securities market as a giant casino, using trading techniques that have odds as bad as any slot machine.

If you lose money day trading, you won’t get free drinks or comped tickets to the Celine Dion show in Vegas. See Casino Gambling For Dummies Cheat Sheet.

Gambling Vs Investing – What’s the Difference?

Difference Between Investment And Gambling Comparison Chart 2020

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:

Difference Between Investment And Gambling Comparison Chart 2019

Difference Between Investment And Gambling Comparison Chart Pdf

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