Investing in shares = Gambling

Linton

FTSE100 dividends are normally around 3-3.5%/year. Individual companies under normal circumstances are typically in the range 0%-6%/year.

savings_my_hobby

Linton wrote: »

"Take a risk in the hope of..." applies to many things in life as I have said. Crossing the road because you want to get to the other side is a risk to provide a benefit. Saving is taking a risk that you will never see your money again in return for some interest. Taking 3 years to go through university in the hope that the resultant better pay will compensate you for the costs and 3 years not earning is a risk.

Are these gambles? if not why not?

its like this, saving money in a bank provides a risk, of course, for reasons obvious to us all, although less risk than having it under your bed for equally obvious reasons, burglary, fire etc. so to sum up that risk its a choice between put it in a bank earn limited interest or keep it under bed and more than likely lose purchase power or get it nicked or destroyed, or invest it for a long period of time and hope when you come to need the fund (after all other provisions as been exhausted) it is equal to or greater than the original investment after all other factors have been accounted for, which it probably will be but there are no guarantees so its a gamble.

taking 3 years to go to university is a risk, of course, by doing so you are speculating to accumulate, you/I or whoever else may not pass the course, gain the qualification. even if you/I or they do pass it is no guarantee to a better job than one you/I or they may otherwise have got. Same applies for apprenticeships. We all know of people have been to uni to end up working for nat min wage or fell pregnant and ended up as a single parent, the 18year old qualification backed with no work experience may not be as attractive as a new qualification to some employers. A qualification paradoxically may even prevent getting a "lesser" job due the potential employer not wishing to be a "stepping stone" for the graduate and prefers a permanent person who is happy to work for "x" salary.

You/I or they may actually pass the course and get a great job and live happily ever after but there are no guarantees , so its a risk, a gamble that it pays off, after all we could have spent those three years earning (however little) and establishing ourselves in work, so would YOU call it a gamble? I would.

Of course there are risks to everything in life, damn even breathing, we could breath in a virus that could wipe us out.
yet if we don't breathe...

I'm listing negative things to make a point, if we all thought like this nothing would ever get done.

The gamble comes with weighing up the risks and making the decision, when ever we choose either/or we are gambling that we made the right choice. There will always be what ifs, there will always risk and there will always be decisions to be made.

Anyway as you have admitted investing carries risk and I have informed of the relationship between risk and gambling why are we still debating? it has been fun though;)

Thrugelmir

berbastrike wrote: »

How much are dividends?

I can now understand why an IFA wished to charge you 3%.

Troll as much as you like. I'm out.

Malthusian

Trololololol.

Linton wrote:

My definition of a gamble is one where the reward is much higher than the stake but the chance of failure is very high, certainly 50% or often much more. With that definition sensible investing isnt a gamble.

A better definition and just as simple: if you expect to lose money over time, it's gambling. If you expect to make money over time, it's investing.

Gambling doesn't necessarily have a high failure rate - in the first round of the Darts World Championship I think you could bet on Michael Van Gerwen to beat Renee somebody or other at something like 1-3000 on. That bet has a very low chance of failure. But of course your expected return is still negative because if you ran that match 3,001 times MVG would lose a lot more than 1 of them.

If you bet on a roulette wheel you expect to lose 5% of your money with each spin, and if you bet on day-trading you expect to lose the transaction costs every time you buy a share. If you have a diversified portfolio of investments held for the long term then you can expect to make money, assuming you don't panic, gear up or fail to diversify.