Investing in shares = Gambling

Carnival789

masonic wrote: »

Is it useful to state saving IS gambling?

Ummmmmm, no not really.

HappyMJ

masonic wrote: »

There seems to be an implication by several posters that depositing money in a savings account carries zero risk. Clearly that cannot be true. Banks can fail and so can compensation schemes. Is it useful to state saving IS gambling?

The risk of a bank failure and a compensation scheme failing to pay out is minuscule in comparison to a company failure and the value of a share falling to zero.

Saving in a savings account isn't gambling as you will always get your stake back. You aren't risking anything. The income you get may not be enough to beat inflation but there is no capital risk.

atush

Quote:
Originally Posted by berbastrike View Post
"Investing" in shares is simply gambling. Do you agree/disagree with my opinion?

I disagree with this opinion, as I pretty much do with ALL your opinions

savings_my_hobby

masonic wrote: »

There seems to be an implication by several posters that depositing money in a savings account carries zero risk. Clearly that cannot be true. Banks can fail and so can compensation schemes. Is it useful to state saving IS gambling?

I have implied that saving in banks carries less of a risk, I certainly don't believe it is zero risk.

System

Linton wrote: »

There is a fundamental difference. In a betting shop the odds are against you - the more bets you make over an extended period the more likely you are to lose. With investing the odds are stacked in your favour, so the more bets you make by investing in a wide range of assets, and the longer the term you invest in, the more you are likely to win.

A cash account is from that point of view worse than a posh betting shop: over time you are very likely to lose wealth and certain never to make a large profit.

If investing is a posh betting shop so is any other use of cash to buy an asset in the hope or expectation of future gain. Buying a house rather than renting is partaking in posh betting as is a BTL. Paying for a university education is posh betting. Setting yourself up in business is posh betting. No difference between those and buying a % of a company, which is what mainstream investing boils down to.

What is the difference between spread betting and buying shares? Same risks, yet spread betting is defined as true gambling

Linton

HappyMJ wrote: »

The risk of a bank failure and a compensation scheme failing to pay out is minuscule in comparison to a company failure and the value of a share falling to zero.

Saving in a savings account isn't gambling as you will always get your stake back. You aren't risking anything. The income you get may not be enough to beat inflation but there is no capital risk.

If you just buy shares in one company - yes I would agree. On average you will win but you have an non-ignorable chance of being wiped out. However if you buy shares in hundreds if not thousands of companies by the use of funds the chances of being wiped out are much less than those of losing all your money in a bank collapse. Indeed if economic conditions were such that a broadly invested fund was wiped out the chances of any bank surviving must be very small. In the longer term you are almost certain to make a much larger profit with investing than you could with savings.

savings_my_hobby

Linton wrote: »

There is a fundamental difference. In a betting shop the odds are against you - the more bets you make over an extended period the more likely you are to lose. With investing the odds are stacked in your favour, so the more bets you make by investing in a wide range of assets, and the longer the term you invest in, the more you are likely to win.

The fact that the odds are stacked in your favor simply means it is less of a risk to invest rather than gamble in the traditional sense of the word.

the phrase "likely to win" reinforces my point.

Also investing for a longer term presents it's own risk. You could die before your investment pays off therefore never reaping the rewards of your investment.

Don't get me wrong a bigger risk for me would be to live hand to mouth and have nothing for old age but even so, investing is taking a risk for the chance of a financial benefit. Risk and gambling go hand in hand. Weather it is small or large risk it is risk none the less.

masonic

Carnival789 wrote: »

Ummmmmm, no not really.

HappyMJ wrote: »

The risk of a bank failure and a compensation scheme failing to pay out is minuscule in comparison to a company failure and the value of a share falling to zero.

So, if it isn't helpful to equate saving to gambling because the risk is small, where do you draw the line? What probability of total loss is small enough to consider something not gambling? How do you determine such a probability? How do you convince everyone to agree with your definition and limit?

HappyMJ wrote: »

Saving in a savings account isn't gambling as you will always get your stake back. You aren't risking anything. The income you get may not be enough to beat inflation but there is no capital risk.

That isn't true. There is a capital risk, albeit a very small one.

On the flip side, it is possible to invest in products investing in shares where your 'stake' is guaranteed (to the extent that the counterparty is able to repay it) - certain types of structured products, for example, and some of the awful investment products offered by Friendly Societies. In the former case you are gambling with dividends and potential capital gains (premium bonds would be a related example of this). In the latter case you are effectively insuring yourself against loss by paying exorbitant setup and ongoing charges - but paying those premiums is essentially a gamble.

berbastrike wrote: »

What is the difference between spread betting and buying shares? Same risks, yet spread betting is defined as true gambling

The main difference is time in the market. That has a very significant effect on the risk profile.

Also, spread betting can be used to hedge as well as gamble, so it depends how you use it.

Linton

savings_my_hobby wrote: »

The fact that the odds are stacked in your favor simply means it is less of a risk to invest rather than gamble in the traditional sense of the word.

the phrase "likely to win" reinforces my point.

Also investing for a longer term presents it's own risk. You could die before your investment pays off therefore never reaping the rewards of your investment.

Don't get me wrong a bigger risk for me would be to live hand to mouth and have nothing for old age but still investing is taking a risk for the chance of a financial benefit. Risk and gambling go hand in hand. Weather it is small or large risk it is risk.

There is no risk-free way to enhance or even maintain stored wealth. A reasonable objective of sensible investing is to reduce the risk to your future financial well-being to around the level of the background risks of life you are subject to anyway. Do you object to taking advantage of the higher interest rates normally available from fixed-term savings because there is a non-trivial chance you might die before maturity? More likely you accept the gamble on the basis that it is probable you wont. Even so that risk is greater than the risk that you will lose money sensibly investing for 20 years.

savings_my_hobby

Linton wrote: »

There is no risk-free way to enhance or even maintain stored wealth. A reasonable objective of sensible investing is to reduce the risk to your future financial well-being to around the level of the background risks of life you are subject to anyway. Do you object to taking advantage of the higher interest rates normally available from fixed-term savings because there is a non-trivial chance you might die before maturity? More likely you accept the gamble on the basis that it is probable you wont. Even so that risk is greater than the risk that you will lose money sensibly investing for 20 years.

Correct there is no risk free way to enhance or even maintain stored wealth. so then you must agree that you are taking a risk in investing therefore a gamble. All we are talking about is weather it is a gamble to invest. Yes as I eluded to in a previous post there are riskier ways of gaining wealth we agree on that. Surely we agree that investing IS a gamble by the very definition of the word?