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Many of the people confuse about Stock Market/ Share Market

They often ask others this question.

Is Stock Market Gambling?

Might be you also having the same confusion in your mind.

In this article we are going to see the characteristics and main difference between Gambling and Investment in the context of Stock Market.

Is Stock Market Gambling or Real Investment?

Hello Money Enthusiasts, How are you?

Are you feeling unsafe while investing your money into the Stock Market just because your friends are convincing you that it is pure gamble and none can be succeeded?

So, here is the answer for your question : Is Stock Market Gambling or a Real Investment.


is stock market gambling - Arable Life
Stock Market – Gambling or Investment?

We live in the society where all of us want to earn more money. We also do hard work to achieve it. But tragically many people work without understanding its core parts such as the work pattern, Risk / Rewards, Value of Time and all.

Trading and Investing in Stock Market also carried the same thing.

It also has some work pattern, Risk / Reward System, Value for Invested Time, etc. But unfortunately very few people understand it.

When majority enter the Stock market they make exit when they make huge losses. But it is our responsibility to learn, and get the detailed knowledge about it.

In terms of Stock Market, many people simply state that the stock market is one of the biggest legal platform of Gamblers.

I may say those people are foolish because they state without knowing or understanding the basic characteristics of Stock Market.

If you ask any financial experts “How can I earn huge money in a lesser amount of time?

At first he will try to explain how things works. But still you didn’t convinced then simply advice you to put your money to Gamble.

Because wins in gamble give you a huge returns (Double or Triple) in very few hours. But it also carries the risk of losing everything.

By knowing the fact of gambling if you cross questioned him then expert will say no to gamble his hard earned money.

The secret behind this is,

“Amateurs focus on rewards but professionals focus on risk.”

Vaibhav Dhotre

No doubt finance professionals earn good money (if not double or triple) without doing gambling. Because they believe in investing not gambling.


Here is the little difference between investment vs gambling

Investing

  1. Can manage risk in investment by insurance, hedging or diversification
  2. A true asset which can pass to descendants and helps to boost the economy
  3. Have multiple sources of income like rental, dividend, sale, etc
  4. Tax Benefits u/s 80C‌/D of Income Tax Act, 1961
  5. Regulatory Control (RERA, SEBI, RBI, governs to protect investors)
  6. Analysis methods available (Qualitative, Fundamental, Technical, etc.)
  7. Habit of reading books or newspapers and good community
  8. Getting help of professionals for better investment
  9. Enjoy compounding effect for the long term investment

Gambling

  1. Gambling can’t manage risk as there is no insurance or hedging
  2. It can not be a true investment option to be invested as there is no pass on benefits and no help to the economy in the longer term.
  3. It has only source of income only when we win
  4. No tax benefits can be applied. Most of the places gambling is strictly prohibited
  5. No regulatory authority in place so it is the most risk to recover amount to receive.
  6. We can’t analyze the probability of losing
  7. Gambling never improves us. And doesn’t get any good community
  8. Can’t take professionals help
  9. No compounding effect
is stock market gambling - Arable Life

Investing Characteristics

  1. Have news impacts
  2. Support for Government
  3. Regulatory Authority
  4. It is in the legal ambit
  5. Processed by Computers
  6. Various Analysis methods available
  7. Increases thinking ability
  8. Gets habit of managing assets
  9. Becomes intelligent in spending
  10. Risk management is possible
  11. It has compounding effect
  12. Can possess multiple sources of Income
  13. Can have Passive income
  14. We are having ownership of company’s capital

Gambling Characteristics

  1. It has no relevance to the news
  2. Government never support for Gambling
  3. It has no regulatory Authority which controls its operations
  4. Gambling never comes into legal ambit
  5. Few gambling stations are processed by Computers
  6. It has no analysis method, it has only probability
  7. Increases probability analysis ability
  8. Does not get habit of Spending or managing money
  9. Do not get financial intelligence
  10. Risk can not be managed
  11. It has no compounding effect
  12. It does not possess multiple sources of income
  13. Does not have passive income
  14. We have ownership in nothing

How Stock Market Can’t become a part of Gambling?

Stock Market can’t be a Gambling because of Following Points.

Diversity

Stock Market is a place where people transfer their ownership of any company with one another. Stock Market includes number of Companies of different sectors. Companies are fully in diverse condition.

Any person can choose any company to buy from any sector.

Regulators

All the working of Stock Market is fully under control of SEBI (Securities and Exchange board of India)

And Stock Exchanges namely NSE and BSE (i.e. National Stock Exchange and Bombay Stock Exchange respectively) and other regulators are working behind to control smoothness of the trades.

Due to these there is very lesser risk of frauds and cheated by someone.

All these authorities constantly monitoring on each company to protect investors.

Dividend Benefit

When a person invest his money to buy shares of a company, he becomes the part owner of it. That means whatever the company earns by doing its routine business, investor becomes eligible to enjoy that profit in the form of dividend.

At the time of AGM (Annual General Meeting) company notifies its investor about the profits/losses and future plans and distribute its dividend per share to the investors.

This is the feature attract people to invest in the Stock Market.

Control

Though one can become a part owner of the Company, he can’t take control of it. Management Control, Decision Power and Ownership are the different concepts.

When one buy shares he becomes the owner but neither can he becomes Manager nor possess the Decision Authority of the Company.

This is the good example of Good Governance.

Because if every shareholder gets the decision power then the company becomes direction less. It can’t work to achieve its goals and objectives.

So, one or more persons who are highly intelligent and expert in management can handle the company well.

This makes investors profitable consistently over the time.

is stock market gambling - Arable Life
Control of Direction and Management over companies – Arable Life

Now you Decide…

Let me ask some questions to decide yourself about your question.

“Is the Stock Market gambling or Real Investment?”

  1. Stock Market used as an Indicator of Country’s Economy for taking important decisions. Why?
  2. Why most of the foreign investment is made in the same market?
  3. Why professionals or AMCs (Asset Management Companies) invest billions in the Stock Market?

The reason behind this is, the Stock Market was established purely for investment purpose. Public can invest their money to grow with businesses and companies too can raise funds from Public as well.

Meaning of Company in Latin is Come and Eat Bread.

So everyone can partly earn from companies by investing their money.

People lose their money because they do not understand the rules and features of Stock Market and enter blindly.
Hence, the result is obvious. Series of huge losses to disrupt completely.


References

Internal

  1. The Best Solutions over BIG loss in Share Market – Arable Life

External

  1. Gambling – Wikipedia