ARE YOU INVESTING OR GAMBLING?
It is always best to know whether you are making a gamble or investing your money to get future returns. Gambling is where you put in cash with the hope of gaining something from your input and without putting in the necessary work. It is a common occurrence in casinos and other types of gaming. However, did you know that quite a large number of investors engage in gambling as opposed to investing? Where do they go wrong and how can you avoid getting into such a situation?
You may believe that you are not a gambler. However, after looking into the reasons as to why you invest, you could quickly conclude that you do play about with stakes. An example of a gambler is someone who is always itching to get in on the next new thing. If someone comes up with an idea of how to get some money fast, they will be up for it. These people go for get-rich-quick schemes, and they often end up with nothing as a result. Here are some of the reasons which could lead you to gamble as opposed to wise investing.
Bowing to pressure
It is quite natural for people in the same circle to express their interest in certain investments. It could be that one person developed a love for the stock market and they are making a tidy sum out of the venture. Slowly, other people gain interest, and soon, you may feel the need to conform to what your friends are doing. However, the manner in which you go about it determines whether you are gambling or investing wisely. If you go in without researching as to what options would work for you, that is a gamble. If you take your time to understand the workings of the market and how best you can exploit the opportunities available, then you are making a wise investment. In this way, you can control how much you get from the venture.
The critical factor that leads to failure in investing is the lack of accurate information, and this leads to gambling. The only way to overcome this difficulty is by equipping yourself with knowledge.
There are two main reasons why people find themselves gambling with their money:
For some people, it is entirely about the thrill. Someone could be seated watching shares drop in value, and they could be excited at the possibility of losing all their money. You may wonder why this is the case, but it goes back to social pressure. If someone’s interest in a venture stemmed from trying to conform to the norm, losing money will not be a big deal as those around them will also be experiencing the same. Trading in the market also enables one to interact with different people who share different perspectives. Over time, it is easy to get caught up in the concept and to focus on distractions such as people’s beliefs. When investing, your focus should be on how you can avoid the emotions and get down to mastering the techniques to exploit the opportunities available to you best.
Why are you investing in a venture? Are you hoping to make money out of it or do you wish to emerge the winner in the situation? The drive behind your investing renders you to be either a gambler or an investor. Supposing you invest in shares in company A because you believe that they are over-sold, and they begin to fall in price without stabilizing at any point. If your focus is on winning, you could fail to realize that maybe they are not oversold, and there is another reason why they are dropping in value. As such, you would hold on to them even when it did not make financial sense as you would not wish to lose. However, if you are investing wisely, you would count your losses and move on to another venture with ease. You would also learn from your mistakes which would aid you in making better decisions in the future.
People who gamble rely on their emotions and they invest to win to prove a point in society. However, the best way to secure future returns is to come up with a systematic way of doing things as this will serve you in the long run.