Unless you are an ultra-conservative person, just keeping the money in cash or bank deposits will never help you beat inflation. You have to invest in assets/instruments that have the potential to generate good returns and beat inflation consistently in the long run. And all such investments are NOT risk-free. All of them carry some degree of risk.
So proper investing is not about avoiding risks at all. It is about managing the dose of risk that you take.
And if for some reason your approach to investing feels like playing in a casino or gambling, then you need to take a pause and rethink. You are not doing it correctly.
I have seen quite a few people think of equity investing as gambling. But that is not true. And sadly, due to this wrong comparison, people don’t give equities the importance it deserves and miss out on piggybacking this great asset class to generate good, inflating-beating returns.
Have no doubts. All investments carry risk, of some kind or the other. It is just about knowing about those risks and then managing them by taking probability-based calculated risks.
Investing isn’t like gambling.
But the line between the two is thin and you can easily cross it unknowingly.
When you invest properly, then investing shouldn’t feel like you’re just a visitor in a casino. Instead, it’s more like you are the casino owner! This may sound odd but hear me out. Think about it: every time someone comes into a casino, the casino is taking a chance. Sometimes, a visitor might end up winning big and as a result, leaving with more money than they came in with. But far more often, people lose more in casino and it’s the house (or casino) that ends up winning. How? Well, the casino really knows its stuff about all the games it lets people play. Sure, now, and then, the casino might lose some money, and sometimes luck isn’t on its side. But in the long run, the casino wins way more than it loses. This is because the casino is smart about the risks it takes. It makes sure the chances are mostly in its favor. And that is how investing should be.
By the way, talking about gambling and casinos, nowadays, because of technology, you don’t even need to visit an actual casino to try your luck. There are so many online real money casino apps options available nowadays. Of course, it should be legal in your region before even you think about venturing into it.
I must warn that unrestricted gambling poses financial risk for everyone. And it should be dealt with accordingly. And as given in this news article (link) even the government advisories suggest that media should refrain from too much advertising of such betting platforms and also celebrities and influencers to refrain from endorsing and promoting illegal betting activities.
Many people confuse gaming industry with gambling as well. Both these are very different and as of now, the global gaming industry is currently worth $150-200 billion. And there is a growing trend of Gamification, which integrates traditional game design elements into non-gaming platforms to enhance user experience, significantly improving user retention and engagement. And this is also sort of blurring the boundaries of gaming and casinos across online platforms.
Coming back to the differentiation between Gambling and investing.
While the former is a good diversion for getting some cheap thrills and of course making a ton of money (if you get super lucky), investing is more reliable and about building solid wealth over time. And when done well, it can help you achieve your life’s important financial goals saving for child’s education, retirement, saving for house purchase, etc.
But once in a while even when investing, you will face losses. Like it happens when stock markets fall. Then at that point, it may all look futile and just like gambling. But remember that markets don’t move up in a straight line and may fall in short term as well. But over the long term, and in spite of its ups and downs, the trajectory is upward sloping. So just like a casino, you may have paper losses in the short term. But if you stick around for long enough, you can improve the probability of achieving a successful investment outcome in the markets.