Gambling or Investing

So are you actually gambling or investing?

I have heard people ask if the stock market is any different than gambling in a casino. The answer is it depends if you understand the concept of investing to begin with.

First of all, when you test your luck at a casino the odds are stacked against you. In the long run you will always end up on the short end of the stick when you gamble.

However, when you invest in something properly in the long run you should come out ahead of the game. With that being said, many so called "investors" will tend to speculate on risky investments such as penny stocks, futures , and commodities. If you put your money into to many high-risk investments then you are probably gambling more than you are investing.

There is nothing wrong with having a small portion of your overall portfolio in speculative stocks, and it can actually keep you more involved in the markets when you have a speculative stock in play. However, speculation really should be just a small portion of your overall financial plan.