Is Investing in the Stock Market Gambling?

Posted by Grace under Investing on November 12, 2015

A reader asked is investing in the stock market gambling or not? I am not in casino I just want to put money in stocks. I would like to know the exact answer.

I received this email message last night. And at this time, I want to give my opinion to the question “is investing in the stock market gambling?”. Before we answer that, let’s find the difference between investing and gambling.

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Don’t get me wrong, They both required capital. People use money when they invest and gamble whether they put money in stocks, mutual funds or casinos.

In the stock market game, there are two types of people. The trader and the investor. According to Dummies.com,

Day trading is a cousin to both investing and gambling, but it is not the same as either.

When I searched some answers to the questions just to know other people’s opinion about the difference between investing and gambling, here’s what I found. According to InvestorGuide.com;

“It is generally agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of stock exchanges.”.

Literally, gambling and investing have the same goal. They don’t have the same rules. Investing has different legal documents required while gambling can be done anywhere like casinos or even when you play the lottery; that’s already an gambling activity.

Is the stock market considered gambling?

No, it’s not. Unless you’re a trader and a greedy trader. You speculate and you wish to win. In investing, you don’t have to wish. You should carefully execute a plan (a strategy) and investing can be done not only in few minutes. It was done for a matter of years.

gambling vs stock market

Analyzing Stock Market by OTA Photos on Creative Commons 2.0 via Flickr

Can You Make Money on the Stock Market

Now maybe you asked, can i make money in the stock market? Absolutely YES! You have to ways to make money in the stock market. First is through dividends and second is through capital gains.

  • Further Reading: How to Make Money in the Stock Market
  • Expand Your Knowledge: What is a Capital Gain?

Tips and Warnings

Before you start investing in stocks. Learn how to play stocks using virtual money. I know Wall Street Survivor can help you learn how to invest in stocks using virtual money (I am not sure). I have lessons there, but I didn’t continue it. Try it. Search “wall street survivor”, register and learn how to start investing in stocks.

The reasons why not to invest in stock market are;

  • Your risks appetite is not suitable. Remember, investing in the stock market is very risky.
  • You are not knowledgeable about trading and investing.
  • You are are not familiar in investing whether it is on stocks, mutual funds, bonds. (as in zero knowledge on how does investing works).

What is the difference between gambling and investing in the stock market? You are a gamble if you are a trader, you are an investor if you are a long term investor. You are a gambler if you just speculate. You are an investor if you analyze the market trends.

Always remember, gambler loses money most of the time. Investors get rich slowly but surely and permanently! I choose to invest money. That’s why I don’t trade stocks everyday. I buy stocks today and sell it maybe two months when the stock price hits my target price.

Just a point of view. What do you think why do investing in the stock market consider as a gambling? Let me know your opinion about this.

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