When you tend to invest in the stock market, it seems that you are also gambling in casinos. Well, the statement is true as both highly involve the risk of capital with the anticipation of getting profits. Yet, the difference between the two lies in which one tends to be on a long-term basis and which one is not.
Gambling is a short-term activity that involves money. On the other hand, investing in equities seems to be a lifetime activity.
What is investing?
Allocating funds or putting capital on an asset, such as stocks, with the expectation of generating profit in return is called investing. The main prime of investing revolves around income or price appreciation.
Investors always have the responsibility to decide on the amount of money to risk into. Usually, this is around 2 to 5%.
What is gambling?
Betting or wagering are the other terms for gambling. This is a form of money risking on a certain event in which the outcome is uncertain. Moreover, this highly comes with chances or mere luck.
Gamblers must also learn to weigh how much capital should be put into play. In terms of card games, the pot odds usually assess the risk capital compared to the risk-reward.