MyMoney Online

Why investing in shares is not like gambling

Share values are extremely volatile over short terms.

In other words, they go up and down a lot over the course of a day, month or even, sometimes, a year or three.

So, it’s a “gamble” to invest in shares if you’re in it for a quick gain.

However, if you remain invested in a spread of companies for five to 10 years, or more, it’s as far from gambling as chalk is from cheese.

Gambling is a zero-sum game

If you lose at the casino, “the house” takes from you and gives nothing in return.

No value is created.

When you invest in the stock market you’re buying pieces of companies.

You become the owner of the companies’ assets and share in their profits.

When share values fall

When the value of a share you own falls, you’re not left with nothing.

You still own the same proportion of that company (admittedly one that is worth less than before) and next month (or year) the stock might be up again.

You still share in the profits.

Tata ma chance

Stock market investors, or their fund managers, don’t just randomly chuck their money into an investment.

There might be some uncertainty regarding outcomes in the short- to medium-terms, but you're not simply hoping that luck is on your side.

Long-term values are not volatile at all

Sharpeville, the Soweto Uprising, sanctions, the State of Emergency, the Rubicon Speech, Boipatong, early 90s unrest, energy crises, multiple recessions, war, financial crises and so on and so forth…

Yet, have a look at the chart below.

The value of shares over longer-terms is not volatile at all.

It’s not gambling if you’re 90% sure you’re going to win.

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : Why investing in shares is not like gambling


Recommended

by NEWSROOM AI
Read More
How to help your children get rich (long before they start working)

How to help your children get rich (long before they start working)

Time. It’s the most important factor, says Sam Beckbessinger, author of “Manage Your Money like a F*cking Grownup”.

3 best shares (local and offshore) to buy before the year ends (by I-Capital)

3 best shares (local and offshore) to buy before the year ends (by I-Capital)

Lance Williams of I-Capital shares his stock picks of the week. These are the best shares to invest in, right now.

How to choose the best financial products (e.g. investments, insurance, etc.)

How to choose the best financial products (e.g. investments, insurance, etc.)

The Money Show’s Bruce Whitfield interviews Warren Ingram, Personal Financial Advisor at Galileo Capital.

How to protect your wealth when the JSE is falling

How to protect your wealth when the JSE is falling

How to protect your wealth should the JSE start to weaken...

Why you need a pension fund (or retirement annuity) even if you own a house

Why you need a pension fund (or retirement annuity) even if you own a house

Many people falsely believe they do not have to save for retirement because they own the home they live in.

4 beliefs about shares that keep you from growing wealthy

4 beliefs about shares that keep you from growing wealthy

4 popular, yet patently false, beliefs about stock market investing that's holding you back.

Popular articles
'Evidence is solid. Poor people’s money was used illegally. Shivambu benefitted'

'Evidence is solid. Poor people’s money was used illegally. Shivambu benefitted'

Ray White interviews Pauli van Wyk, an investigative journalist with Scorpio at Daily Maverick.

Two men get away with R70 000 in robbery at Cape Town's World of Birds

Two men get away with R70 000 in robbery at Cape Town's World of Birds

Walter Mangold, the owner of the popular tourist attraction in Hout Bay, was targeted by two men on the premises on Sunday.

Judge Dennis Davis explains estate duty when your spouse dies

Judge Dennis Davis explains estate duty when your spouse dies

Some recommendations by the Davis Tax Committee were met with concerns from members of the public on how they will be affected.

Here's how to check your load shedding schedule in Cape Town

Here's how to check your load shedding schedule in Cape Town

Eskom has warned that more power cuts can be expected as maintenance continues over the next twelve months.

Check out BlitzBokke #Madiba100 jersey for Cape Town 7s

Check out BlitzBokke #Madiba100 jersey for Cape Town 7s

Saru has partnered with Asics to create a special Blitzbokke jersey to celebrate Nelson Mandela’s 100th birthday.

New Zealand company implements four-day work week after successful trial-run

New Zealand company implements four-day work week after successful trial-run

Employees will still be paid for five days of work, but work for four days.