Why is investing not the same as gambling?

Social and sociological there are differences between the Western world and Slovenia. Despite thirty-year transition Slovenians have not learned that with independence we adopted a different system of economic and political regulation, in which certain other rules apply, which make such a system successful. In the Western world, both in Europe and across the pond, everyone has to take care of their own future. To this end, in the West, he educates like this primary family and examples at parents, as well as school system. Thus, no one relies only on pension funds, but each individual, in the vast majority, enriches money by investing in securities companies and recently also others financial instruments, such as cryptocurrencies. Almost half of Americans and a huge number of Europeans do this. In this way, they shape their financial security, their future. This is how Western society develops an attitude towards money that is very different from the attitude towards money that Slovenian society has. Money simply makes money! In a figurative sense: it means a means of ennobling which has no absolute value. Moreover, the value of 1 unit of money is relative. So it can only mean a means of multiplication.

The belief that it is investing equals gambling it could not be more wrong, but it is typical of societies and countries in transition. Countries like Slovenia. Where parents of crypto-millionaires and financiers, when asked what their children do, often answer that they have an online business. They don't say that they are investors who enrich the money with financial fraud. The latter are not venerable, because therefore it is not necessary to do physical work, but only to sit. That's also why we have Slovenes tons of online millionaires. Of course, not because of the web, but because of management of financial instruments.

Investing is a combination of technical skills, knowledge of economic trends, monitoring of socio-political circumstances and, of course, personal latitude. A good investor is a professional who devotes a large part of his working energy to this segment of life. He says professional investors they work from 9:00 a.m. to 11:00 p.m. It is a knowledge business that, like any business, rewards those with a lot of knowledge and punishes the ignorant.

5+ golden rules to start investing

It is human nature to fear the unknown. And things are no different when it comes to money. One of the main things that people really like prevents investment, is the fact that most people are aware that they have insufficient knowledge and do not know exactly how the market works. Most cannot avoid the feeling that with their money and livelihood "they gamble". The moment an individual understands this, he has the basis to become a successful investor. Because he knows he needs knowledge.

5 reasons why investing is not the same as gambling!

We present to you 5 specific reasons which make investing not gambling at all!

You have something tangible - you buy things that exist in the real world and you use them every day!

When you buy a share in a company (securities, shares), buy a small piece of that company. You can literally see many stocks of companies and they are real in the real world. You just look out the window and admire your neighbor's new one Tesla. Or you open the fridge and pour yourself a glass Coca-Cola. You turn on the TV and watch a series from the content provider Netflix. These are not just abstract ideas on a computer screen, these are actual, physical businesses that generate income and innovate, they advance technology or develop new medicines or goods. These are the things that keep people alive, entertain them, or make it easier for them to communicate with loved ones around the world.

Gambling has none of these qualities. It is simply an agreement between you and the casino or casino company that a certain thing will happen or not - usually heavily weighted in favor of the "house".

A zero-sum game

Most gambling is a zero-sum game. You win or you lose. There is nothing in between. This is how you take risks with gambling 100 percent of your capital as soon as you bet. Conversely, as an investor, you can spread your risk across multiple companies and different ones stock market funds or indexes. By investing in a specific index bet on a multitude of companies in a particular industry or industry sector. So you can count on the value of this industry increased in the long term. Companies will come and go, but the index will rise in the long term.

That's what we call it diversification, and is a key principle that gives investors the greatest chance to avoid losses in the long run and not bet everything on one horse.

S&P 500 - withstandard of the American stock market – has always brought in an average of more than 10 percent. The key word here is “on average". We can certainly see a lot of "red" in this index, but positive returns dominate over negative ones in the long term.

Time in the market literally means time equals money

If we talk about the long term, time is one of the greatest assets of investors. The longer you invest, the more likely you as an investor will be able to detect market dips and react appropriately. Especially in case of diversified portfolio. Also, if the value of your investments falls, there is no limit to how long you can continue to hold. Also, as an investor from historical facts, you know that the market keeps breaking records. You just need to give it time. If you haven't invested in risky investments, you can always just win. Because the market is historically higher.

Gambling does not allow this. Your earning opportunities end as soon as the game or bet is finished.

Decisions based on information, not guesswork

When we invest our money in securities or company shares, we need to review them regularly financial information on revenue, debt level, profit, performance forecasts and much more. All of this information is publicly available to anyone who wants to view this basic accounting data the health of the society in which they have their assets.

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If the investor understands and interprets this data correctly, can make an informed decision about how the company or fund works he invests his money. He is also good at spotting certain trends economic sectors.

In contrast, the casino is heavily weighted in the house's favor from the moment you walk through the front door. O slot machine or roulette table you don't know anything, and even if you did, it wouldn't matter who the manufacturer is. You have no idea how many times a day this machine has paid out, it's all just a coincidence. Always in favor of the "house".

Gambling, sports betting, have nothing to do with investing. Also, if you study the entire history or even the "shape" and pedigree and achievements of the horse you are betting on, you are studying the winning streak of your favorite football team. It's all just a guess. This activity is the easiest to describe as an educated guess, which investing simply isn't.

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When your money works for you and for you!

While many go to work and create a classic event, the investor does not even have to lift a finger. While you wait for your assets to appreciate in value, you may receive income in the form of dividends, similar to how you would receive interest on your savings account. What we would like to point out is that money is working for investors - while the stock indexes in Asia sleep and wake up, as they finish their business day and the ever-wild US market wakes up.

Gambling does not have these qualities. You place a certain amount on the bet and just hope.

You don't need knowledge, information for gambling... However, for both investing and gambling, we need strong emotional control and our own ability to limit ourselves. But as mentioned above: if you understand what you're investing in, know your risk tolerance, and are in it for the long haul, you have a good chance of growing your wealth and achieving your financial goals.

There are no shortcuts in investing, only in gambling. They are just much more risky.