Anonymous
Anonymous asked in Business & FinanceInvesting · 4 months ago

What is the real fundamental difference between financial investments(like funds, stocks, futures and options) and gamblings?

4 Answers

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  • 4 months ago
    Best answer

    When you make a financial investment you are trying to make money based primarily on the future success of (a) business enterprise(s).

    When you gamble money you are trying to make money based primarily on chance (such as a bet on a roulette wheel) or where the odds are manipulated to insure insure the total return to those gambling on an event will be less than the amount they bet (such as a parimutuel betting on a horse race) or both.

    That is what I consider the most fundamental difference.

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    Other people consider the most fundamental difference is that most financial investments make money while most gamblers lose money. However, that is far from universal. For example, futures and options are known as "zero sum games" for one person to make money on a futures or options contract another person has to lose the same amount of money on the same contract. If you trade individual stocks it is not uncommon for a person to lose money on some stocks. However, as another answer pointer out, the overall stock market has a strong history of making money for investors over a longer time period.

    Similarly, there are gamblers who consistently make money gambling over longer time periods. Blackjack card counters, professional poker plays, and a very small number of sports bettors are examples.

  • Bryce
    Lv 7
    4 months ago

    The historical compounded annual return of the S&P 500, including dividends, for the last 10 years is 13%, 20 years: 5.6%, 30 years: 10%, 40 years: 11.6%. Over those time periods if you owned a S&P 500 index fund, you would always gain and never lose.

  • Anonymous
    4 months ago

    You have no common sense if you cant figure this out on your own.

  • Anonymous
    4 months ago

    Long term with gambling, you are pretty much guaranteed to lose because of the way the percentages are set.

    Long term with the stock market, you are pretty much guaranteed to win. Just look at the major indices over the last 10 years.

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