Many skeptics, especially people who have never invested before, regard investing as another form of gambling. Even though there’s a thin line between the two, they are two vastly different concepts.
Do you know if you are truly investing or “gambling”?
Watch this video as Christopher Tan, CEO of Providend, shares three factors that you can use to determine whether your investment style or the instrument that you use is more gambling or really investing.
Hello everybody. Just recently I did a radio show at a radio station and the presenter asked me a question. She asked, “Is investing the same as gambling?”
And I thought that’s a really interesting question. And so today, I am going to share my thoughts in this episode.
So, is investing the same as gambling?
You know, it’s really a very thin line.
So, I’m going to share with all of us three factors that you can use to determine whether your investment style or the instrument that you use is actually more gambling or really investing.
So, the first factor that I’m going to share all of us is what I call your time horizon. Now if you are gambling, usually the time horizon is really a more short term which means to say that you want a quick return in the short term. And you know, that’s really not investing. That’s really more speculation.
But if you are investing, it means that you are prepared to set aside capital and accepting that in the short term you might not get any benefit because you want a reasonable return over the long term. That’s the first factor.
The second factor is your basis of investing. If you are gambling, it is really based on luck. And by luck, I mean trying to guess when it’s the best time to get in and out of the market. Trying to guess whether a certain geopolitical situation is going to happen and how it’s going to affect the market. Trying to guess whether a certain government will make any fiscal and monetary policy and how it’s going to make an impact on your investment. Sometimes if you think about it, that’s really gambling because it is just so difficult to guess.
But, if you are investing, it is really based more on evidence, solid evidence, before you make an investment decision.
And the third factor I’m going to talk about is really your mindset when you are investing. Is it based on greed? And by greed, I mean that you want to put in just a little bit of money, but you expect a huge windfall over a short period of time.
But, if you are really investing, you are rational. You are prepared to set aside money, as I mentioned, over the long term and you expect your return to be reasonable.
And so the next time when you are investing or when you decide to invest in an instrument, whether be it a unit trust or anything, consider the style of your investment, the style of the fund managers’ investment. Is it gambling or is it more investing?
So, if you want to find out more about how you can get long term returns through investing, do contact us for an initial meeting. Thank you very much for watching.
For more related resources, check out:
1. Don’t Make Long-Term Decisions Based On Short-Term Information
2. What Happened After The Global Financial Crisis
3. Thoughts & Reflections From Hong Kong: Why Is Investing So Difficult?
We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current investment portfolio, financial and/or retirement plan, make an appointment with us today.