In our article ‘how to invest in shares’, I’ve written about why investing isn’t the same thing as gambling. I draw attention to the ‘house advantage’ enjoyed by casinos and bookmakers. In the financial markets, investors with a stake in companies are the ones with the edge when investing over long periods. And unlike at the poker table, it’s possible for all stock market buyers to win.
However, when approached in the right (or should I say wrong?) way, the stock market feels very similar to gambling.
An idea that has struck me recently is that rather than spending (and inevitably losing) money with bookmakers or casinos over a long period, why not redirect that money into the financial markets instead?
This way, you can use the money (which you otherwise would have lost over the long term), on some exciting or high-risk investment punts which you wouldn’t choose to make with your own investment portfolio.
Again, the point here is re-directing money you would have normally gambled away and thus you are fully prepared to lose. This mindset will open up many high-risk opportunities which still have a positive expected return and also provide a similar rush of excitement and adrenaline. These could include:
- Equity crowdfunding
- Leverage long equity ETFs
- Individual company shares
- Property crowdfunding
You could also consider some investments which don’t necessarily have positive expected returns, but could still increase in value over the short to medium term:
It’s like the differences between traditional and online casinos. With land-based casinos, the process is much slower because you have to fill out the papers upon winning. On the other side, the latest PayPal casino allows you to play hassle-free because everything is being done in the virtual environment. There is no boring paperwork – just the joy of gambling and winning.
Why is investing more fun than gambling?
The advantage of this approach to gambling isn’t purely financial, it could be more fun too.
While a flutter on a horse race might be over in a heartbeat, a stake in a risky pharmaceutical company could keep you in the race for several weeks.
It’s also fun to pick and choose the company or investment you’d like to make – safe in the knowledge that you’re not risking your real investment portfolio.
You could do this as friends – each picking companies and seeing who succeeds in earning the largest return over the space of a day, week or even a month.
At the end of the day, equity and other investments are unlikely to go to nil, which is exactly what a losing bet at the bookmaker achieves. Rather than your gambling becoming an expense in your incomings and outgoings, allow it to become an asset!
Of course, it will be important to continue to draw a clear line between your fun investing very little money, and your real savings for the future. It would be counterproductive if your love of risky investments begins to bleed into your investment choices in your main portfolio, causing more volatility than you’d be comfortable with.
Overall this is just a quick and fun idea. Please feel free to comment below on whether you’d ever considered cutting back on money you spend on gambling and spending the same money on investments instead.
If you’d bought gold instead of placing bets for your entire life… how much gold bullion would you own now?