The Difference Between Gambling And Investing

Posted On March 7, 2018 2:10 pm

My ex-wife and her family believed that the stock was no different from a casino. Specifically one that is rigged against the regular investor. This meant that even if you might be up in the short-term, eventually “the big boys” would take all your money. This is one of the biggest excuses they had for not saving or investing for the future. In their eyes if anything you put in the market is going to eventually disappear, then you may as well spend it now and enjoy it.

This belief is probably shared by many, which is why, according to the Federal Reserve, only 18.7% of Americans directly own stocks. If you include those who participate in retirement plans, such as IRAs or 401ks, that number is 49%. Or to put another way half of all Americans are not participating in the greatest wealth creation engine of all time. Given that since 1871 the S&P 500 has increased 19,756 fold (adjusted for inflation), that’s a tragedy.

But one that is understandable. After all in the last 17 years we’ve seen not one, but two 50% to 55% market crashes, and could be headed for a third relatively soon. So let me very clearly explain the difference between long-term investing and gambling.

About author

Dividend Sensei
Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I currently write for both Seeking Alpha, Simply Safe Dividends, and DividendSensei.com My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams, and enrich their lives. With 22 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams. I'm currently on an epic quest to build a broadly diversified, high-quality, high-yield dividend growth portfolio that: 1. Pays a 5% yield 2. Offers 7% annual dividend growth 3. Pays dividends AT LEAST on a weekly, but preferably, daily basis