Is Investing in Stock Gambling?

13 December 2018

The stock market is something that attracted people due to the fact that they can make money. Yet, the stock market is not something to be taken lightly, in other words, you cannot just invest your money blindly into whatever is trending at the moment.

People love investing, whether into themselves, their future, a savings account, or any other form that will benefit them later.

Gambling, on the other hand, is something entirely different, where you bet on an outcome of something or just purchase a lottery or bingo ticket, hoping that lady luck will take care of things. This is a very good way to lose money and so is investing into stock without knowing a thing about it.

Is the stock market a gamble? It could be, but it depends on you and your knowledge of how things work.

Speculation vs a Grounded View of Reality

If you plan on investing money, you should know that you might as well lose that money, especially if you base your investment on wishful thinking and not what is happening now and what was happening prior to that event that made the company a trend.

Having some knowledge of the company or companies you plan on investing in should make the risk of you losing money smaller. That does not mean you should invest in a company just because you like them very much or they feel like a winner to you. That is all based on hope and is speculation rather than an actual outcome you could count on.

If you are going to invest in a company, make sure that you know their history and business practices and what their current position on the market is and compare it to their position from their inception up to the present time.

That should give you a clearer picture on how to proceed.

Secondly, know that there are two risks when investing. A capital risk, or the risk of losing money and an objective risk, or the risk of your money not earning anything or reaching a certain goal.

In order to understand them better, imagine having all your capital in a safe somewhere in your basement. Your capital risk is minimal and inflation might turn out to be your only enemy. Your objective risk is, however, quite high as your money is in a safe, not doing anything useful, earning you more money or being put towards any goal.

Research, Do Not Speculate

Investing is a long-term deal. You will not get rich over night and become a billionaire. Think what you will do with that money to earn more money, which is usually what separates speculators from real investors.

But is all of this gambling?

It really isn’t gambling, unless you throw your money at a bankrupt company, but even then, facts are available.

Gambling introduces a risk which is out of the hands of the investor, one that is dependent completely on luck. Speculating takes note of risks and investment minimizes it.