Gambling vs. Investing
I recently went on a tirade against sports gambling amongst a group of friends. I firmly believe that we will look back 20 years from now and realize that sports gambling took down an entire generation. It's literally crippling people. Not rare, random people who are far removed from us. I'm talking about our friends, family, co-workers, and neighbors. Behind closed doors, sports gambling is pilaging families of their resources all around us......perhaps even in your home.
Something happened immediately after this recent tirade, though. My friend essentially called me a hypocrite. Why? Not because I gamble.....I won't even put a penny into a slot machine. I'm a hypocrite because, in his words, I "talk so much about investing on my podcast and blog."
Everyone at the table agreed with him, too. Whoa. That's wild to me. I had to catch my breath after that one.
They explained that investing is 100% gambling. The same principles are at play, but I'm just gambling on companies instead of sports teams. In their minds, whenever we invest money into the stock market, we're gambling, and there's a very real chance we'll lose money.....just like when they throw money at the sports books.
What do the numbers say? First, sports betting. Based on available data, 94%-95% of sports bettors lose money. Remember when Uncle Johnny crushed that four-team parlay and did shirtless victory laps around the house? Yeah, that was a short-term win amongst a longer-term loss....he just conveniently failed to volunteer that little tidbit with you. The data shows that almost every single person will lose money over time. It's the rare 1 out of 20 people who can perpetually pull profits from their betting app.
Now, the stock market. In the 155 years of stock market existence (almost back to the Civil War), there has NEVER been a 15-year window when the stock market lost money. Never. In other words, over a span of 15+ years, 100% of investors who invested the right way would have turned a profit. To further add salt to the investing vs. gambling wound, the worst 30-year window in stock market history provided a 4.4x return. Yes, you would have quadrupled your money over the worst 30 years in U.S. history. That doesn't sound like gambling to me!
Is investing like gambling? They couldn't be more different. Gamblers are nearly guaranteed to lose money, while investors are historically guaranteed to make money. If that doesn't paint the picture, I don't know what will.
Seriously, though, if there's gambling happening in your house, I implore you to reconsider. I'm watching families and marriages melt before my eyes over this stuff. I'm witnessing households get further and further behind on their finances, at the mercy of gambling activity. I'm seeing cash get pushed into gambling apps instead of into 401(k) plans and IRAs. It will eventually catch up with people, and by the time that happens, it will be far too late to remedy it.
Investing (the right way!) has proven again and again to be a safe, reliable, and powerful part of every family's long-term journey. Please don't let that opportunity pass you by.
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