Is Investing in Stocks Gambling?
- Asked By
- Updated On:20-Sep-2022
- Replies:2
Short Answer
No investing in stocks cannot be equated to gambling. As a newbie. someone might think so, but in reality what's the difference between investing and gambling, let's figure it out.
Detailed Answer
Is Investing in Stocks Gambling?
A novice often equates investing in stock markets with gambling at a casino. Of course, there are similarities in investing and gambling. They are both risky and there is no assurance that the capital you put in can be recovered. Having said that, is it reasonable to match up investing? Let’s find out.
What is investing?
Investing simply means, you apportion a part of your money to financial assets like bonds, shares, mutual funds or ETFs. You receive two types of returns from investing:
- Income returns – The dividends or income distributions that you receive from your investments.
- Capital Growth – It is the increase in value of assets from the time of its investments. When you sell your share, this increase will reap you profits. However, due to risk factors such as volatility in market conditions, you may not witness capital growth at all times. You may experience a fall in the value of assets, that will incur you capital losses.
What is gambling?
Gambling is participating in any act that involves risking your money or your precious belongings to multiply it. There are so many ways in which you can gamble, for example, betting, lotteries, casino games, dice games, sports betting etc.,
Gambling vs Investing
- You invest on the basis of your analysis of stock market trends or financial statement analysis. You gamble depending on luck and probability.
- Investment is based on your brains and examination, whereas, gambling is based on your heart and emotions.
- The time span of investment is long term, it takes a minimum 1 year to reap returns, whereas gambling is done on a short-term basis.
- Gambling does not offer you any ownership of assets, whereas while you invest in shares of a company, you receive ownership.
- Gambling is hit or miss, whereas investing is less risky.
- Investing is not addictive, whereas, gambling is compelling and it can lead to mental health complications.
- Investing is authorized by the government and it has regulatory bodies, whereas gambling is restricted in most countries. It is not headed by regulators. In case of grievances, you will have no one to address it.
- You can rely on historical information to invest, however, in gambling you do not have any information nor can past trends help you reap returns.
Is Investing in Stocks Gambling
Although both investing in stocks and gambling involve risk, investing is done based on research, your risk appetite, diversification and investment time frame, gambling is purely staking your money based on luck and emotions. Investing in stocks and gambling are poles apart.
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Discussion (1)
Zerodha as well as Groww, both allow investors to invest in Mutual funds. Groww does not charge any Account opening fees or Annual maintenance Charges but Zerodha charges Rs 200 for Account opening and Rs 300 for AMC. This makes Groww a cheaper and better option when it comes to investing in mutual funds.
Zerodha and Groww are both good players in the Discount Broking space but both have some differences. Zerodha has the largest client base and is the most trusted Broker in India whereas Groww is one of the fastest-growing Discount brokers. Both offer different features to their clients which is discussed in detail below.
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dm.smifs
Investing in stocks is a gamble for those, who do not know what they are doing, A task done after proper research and analysis is not a gamble.