23 October, 2020

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Difference Between Gambling And Investment

Gambling and investment, these two words although distinct are often misconceived and sometimes used interchangeably. In order to get a clear perception of each word, we will have a look at each word and how it is defined.

Gambling in essence is the act of taking risky action with the hope of a desired outcome. In a more realistic scenario gambling is when you take part in an event with uncertain outcome during which you risk money or something of value in order to win money or a prize.There are two main types of gambling: chance based, in which the results are randomly generated, these include lotteries, roulette, gambling machines and bingo and scratch cards. The other typist skill based on where your ability or skill can influence whether you win or lose though it is not always guaranteed. Examples of these are card games like poker and blackjack, betting on sports events, playing casino games, even esports. Esports are now a thing and it is here to stay. If indeed you would love to give it a try, platforms like King billy have a plethora of options to choose from, be sure to check them out.Gambling is not a bad thing, but it can be risky, so we need to keep ourselves informed and make safer choices.

Now that we have an idea of gambling and what it entails, let’s have a look at investment, what it means and how it differs from gambling.

An investment usually is an asset or item acquired with the goal of generating income or appreciation. An investment always concerns the outlay of some asset; it can be time, money, or effort in hopes of a greater payoff in the future than what was originally put in. Investments are expected to produce income or profit. To invest is to allocate money in the expectation of some benefit in the future.

In the financial sector, the benefit from an investment is called a return. The return may consist of a gain or sometimes loss realized from an investment, unrealized capital appreciation or depreciation, or investment income such as dividends, interest, rental income etc.

Investors generally expect higher returns from riskier investments. When a low risk investment is made, the return is also generally low. Similarly, high risk comes with high returns.

Now that we’ve had an idea of what these two words entail, let’s move on and try to understand their differences. Gambling and investing have apparent similarities but there are still principle differences between them.

What are the differences?

Time frame: Gamblers usually play for immediate profit while on the other hand investors allocate money for a particular asset for a longer period.

Leverage: Investors are allocating money from their resources for the investment and this applies mainly to assets to the equity market. Generally, gamblers use their own personal money and bet for entertainment.

Risk analysis:  Investors do have long term risk and return perspective and also they will rely on the fundamental analysis of financials. This can affect the price of the asset and their decision to invest in a particular asset. It is based upon the certain fundamental values associated with the asset.

Asset value: Gambling is based upon odds and bets are placed on assumptions or statistics and at the same time investor does not look at the price of the asset rather it looks at the asset itself to determine whether it worth the investment and whether  to allocate money at the time to get a return later on.

Research: An investor will do some research or background checks to look at some valuation comparisons of maybe some stock compared to its industry peers, or historical norms. Unlike pulling the handle on a slot machine, in the stock market, a little bit of research can increase your chances of making money significantly.  Good Investors do their research, and try to make a fair valuation based on their findings.

Diversification: In investing, it’s wise to avoid putting all your eggs in one basket. Most investors tend to spread their money far and wide, dipping their toes into as many markets and industries as possible to achieve an overall gain.This may not be possible in gambling as bets are usually locked to single events.

Now that we have clearly outlined the differences between these two words, it is up to you to decide which you would like to partake in. There are lots of investment opportunities out there from stocks to bonds to real estate.  If you want to gamble perhaps for fun or for the thrill of it there are also lots of options to choose from. There are casinos, sports betting sites or E-sports betting sites such as Unikrn which offer betting opportunities for esport games like FIFA, League of Legends, Fortnite and so on. Check out kingbillycasino.com to have more insight about its perks and what they have to offer.

Final Verdict

Investing is certainly not gambling. Some investments may fail or even turn out to be disastrous failures, just in a similar manner to losing all your money at the roulette table. But it helps that one should be able to know the difference and discern between the two.

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