Investing is often compared to gambling on account of both carrying risks. Risks also happen to be an essential part of online gambling, making every win that much more exciting.
Read below to find out just what the difference between investment and gambling comes down to.
Investing
The term refers to the process of committing your funds to a specific type of asset with a clear expectation to gain profit as a result. Risk (often calculated) and return are two integral parts,
These two are also related in a very specific way. Generally speaking, the more you risk, the more you stand to gain. The lower the risk, the lower returns you can count on.
Surely enough, there are rules to be followed. For instance, it’s recommended to diversify your investments and risk only a small percentage of your capital base per trade. The number is usually well under 5%.
The strategies in place for investment, no matter the size of the capital, are there to help the investors curb potential losses.
What sets investing apart from gambling is that you own nothing when wagering on a pokie, for instance. Investing in the stock market gives you ownership of shares, and in some cases, that means getting dividends.
There is a lot of technical analysis that goes into trading. Some consider it a science of sorts. Investors can boast wider access to a range of performance-boosting tools, such as detailed charts to identify trading patterns.
An important peculiarity is that in many cases commission is paid to the broker. In gambling, players are not required to pay anything to the casino.
Gambling
Gambling involves wagering money on the outcomes of sports events and casino games, like roulette, blackjack, as well as video pokies. The outcomes are uncertain, which is part of the appeal. You can win big and it can happen unexpectedly.
The outcomes are also unpredictable in sports betting, but there is a certain amount of analysis you can base your strategy on, much like in investing.
When it comes to pokies and table games, since all online casinos use RNGs, they are wired for any outcomes to be random. You might get lucky, but keep in mind for every pokie there is an RTP figure.
What RTP can tell you
RTP shows how much a certain pokie pays to the player. Let’s take a pokie called Elvis Frog in Vegas found at a popular casino Televegas.
It comes with an RTP of 96%, which his pretty nice. What that number means is that for every 100 dollars wagered you get a return of 96 dollars.
This is the average figure, but that means someone wins while someone always loses. The use of RNG means you cannot ever know with certainty which category your game will fall into.
Just like with investing, while placing bets you should only risk the money you can afford to lose. Betting on sports is a lot more similar compared to playing at a casino. The reason is simple – you are betting on sports with loads of statistics in play.
If you know what you are doing, making money is a matter of time. The same goes for some card games when you have a chance to estimate the odds and make a decision.
Poker is a good example. The players read each other, keep track of the hands played, get familiar with the rival’s betting patterns, etc. Some turn it into a real art of sorts.
Investing vs. gambling: key differences
The main differences between the two come down to the following points:
Investing relies on more sources of information, which can shape up the investor’s decision.
Investors can mitigate their losses on account of having more tools to do so (stop-loss option etc)
The odds increase for investors over time while getting worse for gamblers.
Gambling is time-bound and fleeting while investing has to do with longer-term profiting.
In gambling, you are up against the house edge, while investing involves a different mechanism
Conclusion
To sum up, gambling and investing are similar in some way, but there are quite a few differences. But whichever one you choose, remember to keep it smart and stay in control of your capital.
