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*Difference Between Investment And Gambling Comparison Chart Pdf
*Difference Between Investment And Gambling Comparison Chart 2020https://www.podtrac.com/pts/redirect.mp3/media.blubrry.com/prosperity/p/partners4prosperity.com//wp-content/uploads/2010/05/The-Difference-Between-Investing-And-Gambling.mp3
Many people do not differentiate between the following terms when they invest their hard-earned money in different asset classes, particularly in stock market and often get confused between; 1. What is the difference between gambling and investing? Whether it is gambling or investing, various individuals engage their money in different ways with the aim of increasing their assets. Gambling and investing are two common means that people choose for this purpose. While investing and gambling do share one major feature in common, namely risk, the similarities pretty much end there: With traditional casino games, your expected return is negative (typically between -½% to more than -5% on each wager, depending on the game). In other words, the “House” (the casino) has the advantage, not the player. To help you keep straight the differences between day trading, investing, and gambling, this article explains which is which so that you can better understand what you’re doing when you day trade. After all, you can increase your chances of success if you stick to the business at hand. Gambling is time-bound The concept of time is another key difference between stock investing and gambling. Gambling is a time-bound practice, but stock investing can last several years. In gambling, once the game or hand is over, your chances to make more profit from your wager are closed.
Podcast: Play in new window | Download
LISTEN (mp3audio) (5:45 min)
Right before the 2010 Super Bowl, a page 1 article in the February 5, 2010 Wall Street Journal opened with this sentence:
“Investors are sometimes accused of treating the stock market like a casino. Now, one Wall Street firm wants to treat casinos like the stock market.”
The article details the decision of a Wall Street bond-trading company to take over the management of sports betting at a new Las Vegas casino. Lee Amaitis, the company executive who runs the betting operation, says the firm got into sports gambling because “we wanted to turn gamblers into traders.” Using sophisticated financial-markets software, bettors can not only bet on the final outcome, but also make wagers on events during the game, such as whether the next pass might be completed, or who kicks next field goal.
On several occasions, the article noted similarities between investing and gambling. The article even featured a bond trader-turned-professional gambler who said “Wall Street is just a form of legalized gambling.”
Is investing just a form of gambling? For many investors, the answer may be “yes.” But it doesn’t have to be. And it probably shouldn’t be.
In July 2000, Tom Murkco, the CEO of Investor-Guide.com, published an essay titled “What is the difference between gambling and investing?” While Murkco noted that many aspects of gambling and investing might appear similar, there were several distinct and easily defined differences.
For either investing or gambling, the beginning of Murkco’s definition is the same: An activity in which money is put at risk for the purpose of making a profit.
But while the purpose of gambling and investing is identical, the methods by which the purposes are achieved are drastically different. Here are Murkco’s distinctions:
When someone invests…
*sufficient research has been conducted;
*the odds are favorable;
*the behavior is risk-averse;
*a systematic approach is being taken;
*emotions such as greed and fear play no role;
*the activity is ongoing and done as part of a
*long-term plan;
*the activity is not motivated solely by entertainment or compulsion;
*ownership of something tangible is involved;
*a net positive economic effect results.”
When someone gambles…Difference Between Investment And Gambling Comparison Chart Pdf
*little or no research has been conducted;
*the odds are unfavorable;
*the behavior is risk-seeking;
*an unsystematic approach is being taken;
*emotions such as greed and fear play a role;
*the activity is a discrete event or series of discrete events not done as part of a long-term plan;
*the activity is significantly motivated by entertainment or compulsion;
*ownership of something tangible is not involved;
*no net economic effect results.
When defined this way, it’s easy to see the differences between investing and gambling. It’s also easy to see that because of the methods some people use to invest, their behavior may more closely resemble gambling.
For example, industry studies have repeatedly shown that the behavior of mutual fund investors often accounts for poor investment performance. Because they don’t approach investing systematically, emotions like greed and fear may cause people to make impulsive decisions, with little or no research. Not surprisingly, the results from these methods more often resemble the returns from lottery tickets.
Not Gambling with Your Investments: Easier said than done?In his book, Snap Judgment: When to Trust Your Instincts, When to Ignore Them, and How to Avoid Making Big Mistakes With Your Money,author David Adler says it’s the psychological component of investing that is the most difficult to manage. Adler contends that behavioral research shows many individuals have an almost over-whelming set of hard-wired dispositions to take gambles rather than make investments. Adler quotes Andrew Lo, an MIT professor of finance:
“The same neural circuitry that responds to cocaine, food, and sex has been shown to be activated by monetary gain as well.”
For some people, the thrill of investing/gambling can be addictive. But when the stakes are one’s financial future or retirement, or your children’s college education, the need for a thrill shouldn’t come by jeopardizing one’s investments.
This imperative to not compromise investing by gambling highlights one of the greatest benefits of working with a team of financial professionals: Besides receiving informed advice, a financial professional can often serve as a protection against gambling with your investments, by encouraging you to make sound decisions based on good research that have a high likelihood of success.
Take a moment to consider the last few major financial decisions you’ve made in the past year. Then look at the list above. Did you make an investment or take a gamble?
When I was in my late teens, my father shared with me some retirement savings advice that was so compelling that I said, “I need to start investing today!” and I while I didn’t really know how to start investing, I did some basic research with “Value Line”, sought out an actual broker (this was before you could invest online) and bought my first stock (Philip Morris if you can believe it). What he said sounded too good to be true, and counter intuitive, for a highschooler who had been well-versed in math and calculus, but completely naive to real world investing and financial modeling. He said,
“If you started investing at age 25 and put the same amount of money into stocks until age 35, you’d have more money at retirement than if you started saving at 35 and invested the same amount of money in stocks EVERY YEAR until retirement”
So, putting $5000 a year away from 25 to 35 yields more than putting $5000 a year away from 35 to 60?
Yes, here’s the data. It’s just as compelling when running out to 65, but most people like to at least plan for a retirement earlier than 65 these days, I used 60 for my retirement investing model. And it works with any annual amount. The trick is the annual return of course. If you cherry-picked a horrendous investing period by starting 10 years ago, you didn’t earn the long-run 8-10% return that the stock market returns when accounting for dividend reinvestment. However, after the recent precipitous decline in equities, it’s probably not unreasonable to assume that you could earn 8% per year from here over a 20-30 year period given the other hundred + years of data supporting this trend. I utilized 8% which is at the low end of the oft-quoted 8-10% estimates in the literature.
It Pays to Invest Early!
Here’s a graphical representation fo the difference between starting to invest at 25 years old vs. starting to invest at 35 years old.
35 Year Old Starter
Outcome of starting to invest early:
The 25 year old starter invests $55,000 and ends up with $615,580 at retirement.
The 35 year old starter invests $130,000 and still has less at retirement: $431,754.
So, if you’re a young saver questioning the value of starting this early (hopefully upon reading this, if you’re not already doing so, you’ll start investing today!), if you’re the proud parent of a young adult just entering the workforce, or if you’re trying to teach your college kid some college financial tips, please share this article or follow my future articles in RSS (what is RSS?).
Some other related articles you may find interesting:Related ArticlesYou’re Not Following Darwin’s RSS? Check out Why You Have to Subscribe to Darwin’s Finance!
If you enjoyed this post, you can get free updates through RSS Feed or via Email whenever a new post is published. Rest assured that you can unsubscribe at any time via the automated system and your information will not be sold, archived or utilized for any other ’nefarious’ purposes.Difference Between Investment And Gambling Comparison Chart 2020
Register here: http://gg.gg/p2bbc
https://diarynote-jp.indered.space
*Difference Between Investment And Gambling Comparison Chart Pdf
*Difference Between Investment And Gambling Comparison Chart 2020https://www.podtrac.com/pts/redirect.mp3/media.blubrry.com/prosperity/p/partners4prosperity.com//wp-content/uploads/2010/05/The-Difference-Between-Investing-And-Gambling.mp3
Many people do not differentiate between the following terms when they invest their hard-earned money in different asset classes, particularly in stock market and often get confused between; 1. What is the difference between gambling and investing? Whether it is gambling or investing, various individuals engage their money in different ways with the aim of increasing their assets. Gambling and investing are two common means that people choose for this purpose. While investing and gambling do share one major feature in common, namely risk, the similarities pretty much end there: With traditional casino games, your expected return is negative (typically between -½% to more than -5% on each wager, depending on the game). In other words, the “House” (the casino) has the advantage, not the player. To help you keep straight the differences between day trading, investing, and gambling, this article explains which is which so that you can better understand what you’re doing when you day trade. After all, you can increase your chances of success if you stick to the business at hand. Gambling is time-bound The concept of time is another key difference between stock investing and gambling. Gambling is a time-bound practice, but stock investing can last several years. In gambling, once the game or hand is over, your chances to make more profit from your wager are closed.
Podcast: Play in new window | Download
LISTEN (mp3audio) (5:45 min)
Right before the 2010 Super Bowl, a page 1 article in the February 5, 2010 Wall Street Journal opened with this sentence:
“Investors are sometimes accused of treating the stock market like a casino. Now, one Wall Street firm wants to treat casinos like the stock market.”
The article details the decision of a Wall Street bond-trading company to take over the management of sports betting at a new Las Vegas casino. Lee Amaitis, the company executive who runs the betting operation, says the firm got into sports gambling because “we wanted to turn gamblers into traders.” Using sophisticated financial-markets software, bettors can not only bet on the final outcome, but also make wagers on events during the game, such as whether the next pass might be completed, or who kicks next field goal.
On several occasions, the article noted similarities between investing and gambling. The article even featured a bond trader-turned-professional gambler who said “Wall Street is just a form of legalized gambling.”
Is investing just a form of gambling? For many investors, the answer may be “yes.” But it doesn’t have to be. And it probably shouldn’t be.
In July 2000, Tom Murkco, the CEO of Investor-Guide.com, published an essay titled “What is the difference between gambling and investing?” While Murkco noted that many aspects of gambling and investing might appear similar, there were several distinct and easily defined differences.
For either investing or gambling, the beginning of Murkco’s definition is the same: An activity in which money is put at risk for the purpose of making a profit.
But while the purpose of gambling and investing is identical, the methods by which the purposes are achieved are drastically different. Here are Murkco’s distinctions:
When someone invests…
*sufficient research has been conducted;
*the odds are favorable;
*the behavior is risk-averse;
*a systematic approach is being taken;
*emotions such as greed and fear play no role;
*the activity is ongoing and done as part of a
*long-term plan;
*the activity is not motivated solely by entertainment or compulsion;
*ownership of something tangible is involved;
*a net positive economic effect results.”
When someone gambles…Difference Between Investment And Gambling Comparison Chart Pdf
*little or no research has been conducted;
*the odds are unfavorable;
*the behavior is risk-seeking;
*an unsystematic approach is being taken;
*emotions such as greed and fear play a role;
*the activity is a discrete event or series of discrete events not done as part of a long-term plan;
*the activity is significantly motivated by entertainment or compulsion;
*ownership of something tangible is not involved;
*no net economic effect results.
When defined this way, it’s easy to see the differences between investing and gambling. It’s also easy to see that because of the methods some people use to invest, their behavior may more closely resemble gambling.
For example, industry studies have repeatedly shown that the behavior of mutual fund investors often accounts for poor investment performance. Because they don’t approach investing systematically, emotions like greed and fear may cause people to make impulsive decisions, with little or no research. Not surprisingly, the results from these methods more often resemble the returns from lottery tickets.
Not Gambling with Your Investments: Easier said than done?In his book, Snap Judgment: When to Trust Your Instincts, When to Ignore Them, and How to Avoid Making Big Mistakes With Your Money,author David Adler says it’s the psychological component of investing that is the most difficult to manage. Adler contends that behavioral research shows many individuals have an almost over-whelming set of hard-wired dispositions to take gambles rather than make investments. Adler quotes Andrew Lo, an MIT professor of finance:
“The same neural circuitry that responds to cocaine, food, and sex has been shown to be activated by monetary gain as well.”
For some people, the thrill of investing/gambling can be addictive. But when the stakes are one’s financial future or retirement, or your children’s college education, the need for a thrill shouldn’t come by jeopardizing one’s investments.
This imperative to not compromise investing by gambling highlights one of the greatest benefits of working with a team of financial professionals: Besides receiving informed advice, a financial professional can often serve as a protection against gambling with your investments, by encouraging you to make sound decisions based on good research that have a high likelihood of success.
Take a moment to consider the last few major financial decisions you’ve made in the past year. Then look at the list above. Did you make an investment or take a gamble?
When I was in my late teens, my father shared with me some retirement savings advice that was so compelling that I said, “I need to start investing today!” and I while I didn’t really know how to start investing, I did some basic research with “Value Line”, sought out an actual broker (this was before you could invest online) and bought my first stock (Philip Morris if you can believe it). What he said sounded too good to be true, and counter intuitive, for a highschooler who had been well-versed in math and calculus, but completely naive to real world investing and financial modeling. He said,
“If you started investing at age 25 and put the same amount of money into stocks until age 35, you’d have more money at retirement than if you started saving at 35 and invested the same amount of money in stocks EVERY YEAR until retirement”
So, putting $5000 a year away from 25 to 35 yields more than putting $5000 a year away from 35 to 60?
Yes, here’s the data. It’s just as compelling when running out to 65, but most people like to at least plan for a retirement earlier than 65 these days, I used 60 for my retirement investing model. And it works with any annual amount. The trick is the annual return of course. If you cherry-picked a horrendous investing period by starting 10 years ago, you didn’t earn the long-run 8-10% return that the stock market returns when accounting for dividend reinvestment. However, after the recent precipitous decline in equities, it’s probably not unreasonable to assume that you could earn 8% per year from here over a 20-30 year period given the other hundred + years of data supporting this trend. I utilized 8% which is at the low end of the oft-quoted 8-10% estimates in the literature.
It Pays to Invest Early!
Here’s a graphical representation fo the difference between starting to invest at 25 years old vs. starting to invest at 35 years old.
35 Year Old Starter
Outcome of starting to invest early:
The 25 year old starter invests $55,000 and ends up with $615,580 at retirement.
The 35 year old starter invests $130,000 and still has less at retirement: $431,754.
So, if you’re a young saver questioning the value of starting this early (hopefully upon reading this, if you’re not already doing so, you’ll start investing today!), if you’re the proud parent of a young adult just entering the workforce, or if you’re trying to teach your college kid some college financial tips, please share this article or follow my future articles in RSS (what is RSS?).
Some other related articles you may find interesting:Related ArticlesYou’re Not Following Darwin’s RSS? Check out Why You Have to Subscribe to Darwin’s Finance!
If you enjoyed this post, you can get free updates through RSS Feed or via Email whenever a new post is published. Rest assured that you can unsubscribe at any time via the automated system and your information will not be sold, archived or utilized for any other ’nefarious’ purposes.Difference Between Investment And Gambling Comparison Chart 2020
Register here: http://gg.gg/p2bbc
https://diarynote-jp.indered.space
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