If someone gives you $100 as seed money and challenge you to let it grow what would you do? Use it as capital or go to a casino, what would you choose?
This is often the two common scenarios facing people who may have money on their hands, especially when they want to see it grow. Many people say that investing is just the same as gambling, you win some and you lose some. Sounds logical right? Not exactly and here’s why.
Investing and gambling have two things in common- choice and risk. Both have similarity in the dynamics or risk and choice because it involves both the capital and returns.
In both cases, money becomes the object of the capital. However, the dynamics for both a bet and an investment can be differentiated by its causes and effects.
The impacts of investments
There’s always risk involved when you invest your money. But investing is more geared towards the engine that drives capitalism in the market. It subjects your money to the healthy dynamics of a market that has its general impacts driven towards driving businesses or economies.
In gambling, you risk money by placing a bet and if you lose it, you often find it either in the pockets of the one person who won it for whose primary purpose is to hold on to it and goes back to the cycle of risk to get more of it.
In simple terms, investing is good for the economy. It acts as a driving to capitalize a business for more sustainable and calculable gains. With gambling, there’s no definitive impact that it can benefit a larger population other than the person whose pockets are lined with gambling proceeds.
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The pitfalls of gambling
Numerous studies have shown that there are currently an estimated 2.5 million Americans who are affected by some sort of gambling addiction, while there are around three million considered as problem gamblers.
Such an addiction has resulted in the destroying lives of millions of Americans as it has resulted in failed relationships, loss of jobs and indebtedness, particularly for those who continue to gamble. An estimated $500 billion is spent on bets annually.
According to statistics from the National Gambling Impact Study Commission, gambling addiction affects the economy by losing as much as $5 billion each year, on top of an estimated $40 billion spent on creditor loss and social services.
Worse, the study also revealed that two out of three gambling addicts will engage in dubious and illegal acts to pay off gambling debts. Among the other dangers associated with such additions are increasing unemployment, fraud and check forgery, bankruptcy, increased alcohol or drug abuse and poor mental health, just to name a few.
The benefits of smart investing
One of the great advantages of investing is the power of compounding. Today’s markets are proving to be a very strong avenue for growth, especially with the diverse mix of industries, services, and commodities.
Whether investing your money on the stock market, treasury bonds, real estate or valuable assets like jewelry or futures, you stand to earn more interest over time as your seed money continues to fuel the capital.
Your money grows more and more as time passes. The earlier you start the more chances your investment will continue to grow and have more time for it to earn more.
The best thing about investing is that you improve and increase your chances of earning rather than gambling. With gambling, you stand a 50/50 chance of winning. With investing you have higher chances of earning back your investment through effective market knowledge and intelligence.