1239: Investing vs. Gambling - What's the Difference? by Craig Stephens of Retire Before Dad on Investing for Retirement
This is optimal finance daily episode, twelve, thirty, nine, investing versus gambling. What's the difference by Craig Stevens of retire before Dad Dot, com and I am your host and Narrator Huron Optimal Finance daily I'm Dan and welcome back. This is where I read to you from some of the best personal finance blogs on the planet and today 'cause it's Friday I'm GonNa keep this intro Nice and short for you. So let's get right to the post says we optimize your life. Investing versus gambling. What's the difference by Craig Stevens of retire before Dad Dot Com. In my mid teens, I went to Atlantic City with my family for an evening on the boardwalk I was deeply interested in money for someone my age. So the idea of gambling was intriguing to say the least of course you must be over the age of twenty one to enter the casino floor in Atlantic City but kids are allowed inside the hotels we entered one of. The glitzy hotels owned by a certain famed politician at the time and my parents went to play a few slots back at the Beach House I gave my mom three dollars in quarters and asked her to play them in a slot machine for me. I gave her strict instructions to play one quarter at a time and to walk away with the proceeds after playing all twelve coins. I watched from a distance as she followed by precise instructions. She came back with about five dollars I was disappointed to not hit the Jackpot but proud that my strategy returned to profit. Since I thought I knew a lot about money I naturally believed I'd be good at gambling to. Clearly I had a lot to learn about investing versus gambling. Math. After a decade of attending Bachelor, parties, Atlantic City, and Las Vegas I've learned that I'm bad at gambling. I lack the discipline to play like you're supposed to in blackjack the one time I tried craps I crapped out to the tune of one hundred dollars in less than five minutes slots are fund but out comes are inevitable almost everybody sucks at gambling because of math the. Longer you spend gambling at a card table, roulette wheel craps, table slots, or whatever floats your boat the more likely you will lose money. Now before some of you get defensive, I'm talking about gambling against the house I understand that there's an element of skill for certain Card Games such as Texas holdem poker when you play against other people, the biggest soccer at the table Lewis. There's also some card counting and still th partnering skills that can be applied to blackjack that may give a very small minority of players a slight advantage over the house but that doesn't apply to ninety nine plus percent of gamblers. There's a certain kind of machiko. UC. At casinos high rollers dressed nicely in look as though they know how to win that kind of behavior might attract an audience for the evening but probably not a prophet, nearly all of us lose eventually. So the key is to gamble for fun set a firm limit know when to quit and not develop an unhealthy addiction. But despite being bad gambling, I still love casinos I love the aromas piped into the lobby, the free drinks, the extravagant bars and nightclubs, the bustle and the camaraderie at the pi-chao table. I enjoy visit to the horse betting room knowing that I'll walk out with more money in my pocket than nearly everybody else without placing a bet. Casinos are the perfect vice for a night of drinking gambling and entertainment without the kids. That's my kind of fun every once in a while. Investing versus gambling. Investing is not gambling if it's done properly, gambling is certainly not investing. Here's how the Merriam Webster Dictionary defines investing. Quote to commit money in order to earn a financial return to make use of future benefits or advantages. End. Quote. The same dictionary defines gambling this way. Quote to play a game for money or property to bet on an uncertain outcome, take a chance and quote. Gambling Games have odds lose odds are calculable and become more accurate. The longer a player place investing in the stock market is often compared to gambling but investing is not a game. Certain strategies are akin to gambling like trading penny stocks, short term speculation and unprotected option strategies. Those strategies should be avoided properly investing in stocks on the other hand involves the thorough analysis of real world data. The stock market favors long-term investors and there is. No House, the longer the period of time you invest the more likely you'll make money unlike gambling from day to day is what the market or any individual stock will do but the long term average annual increase of the S., and P. Five hundred index is about nine percent as your investment time horizon increases. So do your chances of nine percent especially if you're investing in low cost index funds and dividend aristocrats stocks in retirement accounts. Another major difference between investing in gambling is ownership. When you buy stock, you become a part owner of a business that business sells products and services earns revenue pays dividends and has intrinsic value. The company trades on a marketplace which fluctuates day to day sometimes dramatically. But if you consider your investments as part of a term business, instead of a risky bet on daily stock directions, you'll be more likely to succeed with gambling nearly guaranteed to eventually lose the math tells us. So investing versus gambling are ultimately not like each other at all. Your money or your life. A giant one, point, four, billion dollar casino recently opened not far from my house. The evening of the grand opening helicopters from the local news stations hovered all night above the massive traffic jam keeping awake nearly every child in Zipcode. Mrs. Rb D.. And I waited a few months before visiting one of the casino restaurants on a rare Dave night for three years I commuted past. The construction site monstrosity almost every day as it was being built, knowing my love of casinos and gambling and respect for math I declared that I would never bet a dollar in that place it's too close and gambling addiction is too dangerous. I recently learned that someone I know ruined his financial life by spending an all at a local casino at his age, he should be retired. At this stage in my life I'm confident that I have enough self disciplined to avoid becoming a gambling addict. But why risk it when the casino is so close by I've lost money at the blackjack table and quit only to return a few hours later in hopes of winning it back. I didn't. The force is strong in casinos and addiction would quickly become the greatest risk to my early retirement goal. It's not worth testing the waters. So close to home, I'll save my strict gambling budget for the next time I'm in Las Vegas or Atlantic City as a suburban dad was zero single friends. I don't expect that invitation anytime soon. Sir. You just listened to the post titled Investing Versus, gambling? What's the difference by Craig Stevens of retire before Dad Dot. com. And a real quick thanks to anchor for hosting this podcast anchor is the easiest way to make podcast. They'll distribute your podcast for you. So it can be heard everywhere spotify apple podcast, Google podcasts, and many more. You can easily make money from your podcast to with no minimum. listenership anchor gives you everything you need in one place for free, which you can use right from your phone or computer creation tools allow you to record and edit your podcast. 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