The Difference Between Gambling and Investing

For those that don’t participate in either gambling or investing will be quick to say that both are a bad idea because it involves losing money. However, there are some key differences between the two. These financial activities involve risk and choice-making.

Investors

If we look at investing, we can see that investors have a capital they are willing to invest in a number of investments to reduce probable losses incurred if they only made one investment. This is called a risk management strategy.

When investments are spread over a number of assets, investors have options to reduce loss liabilities to protect their invested capital. When looking at investments made with companies, investors can invest over a long period of time to expand the profitable outcomes.

Gambling

Gamblers have a portion of capital they are willing to place bets on with an uncertainty of the outcome. The aim is to reduce risks while still achieving high profits. A common example of gambling is sports betting. However, there are no strategies involved to alleviate possible losses because it is speculative. Gamblers either win or lose a wager. It is not a long-term way of incurring high profits like investments would.

Studying Behaviour to Assess Risks and Profits

The Financial Study

A lot of investments made by investors are made on a daily basis through technical analysis. This means that companies study trading and stock reports to determine future stock trade profits and losses.

In the USA, there is the Securities and Exchange Commission which protects investors but also gives out financial company information to the public. This information includes company earnings and financial ratios to aid investors in whether it is feasible to invest their capital.

The Betting Study

Poker players don’t have anyone to rely on for valuable information to determine their probable winnings or losses. However, poker gamblers do observe their opposition’s body language to determine what their next move may be.

Pay close attention from start to finish of a game or investment made so you know where your next profit is!