Is there a hard threshold? Do high risk investments such as penny stocks qualify as gambling? Do low risk investments? Annuities? Bonds? CDs?
This comment got me wondering.
Is it more to do with the venue? Stock markets and real estate vs casinos and the lottery?
Were the MIT Blackjack Team gambling or investing?
Is this just another semantic hotdogs are sandwiches discussion or is there an agreed threshold?
Yes. I’d call that an investment in crypto. A risky investment is still an investment.
Maybe we just define the terms invest and gamble differently.
I would say investment is giving your money / time / energy into something with the expectation / belief / hope that eventually in the long run, that thing will become what you want.
Gambling on the other hand, is putting money / time / energy into something with the expectation / belief / hope that it will eminently get you something you want.
Either could be high or low risk. They may not pay money out at all.
You make an investment in teaching your kids to drive, so they will be more independent and capable in the future.
You make a gamble on teaching your kids to drive, that they won’t get them selves into a wreck tomorrow.
Gamble = Short term
Investment = Long term
But term is all relative, long term means something different for everyone.
A four week t-bill has the same term as a hugely out of the money long call on a meme stock, and yet one is a tried and true investment strategy and the other is very clearly gambling.
The difference isn’t the time, it’s the risk profile.
That’s what I mean by using different definitions.
I don’t use the terms gamble or investment exclusively as an evaluation or indication of risk; More as a term of intent.
While I might not call a four week t-bill a gamble, I certainly wouldn’t call it an investment at all.
I’d be more inclined to call a savings account an investment; as a savings account can be used for more long term financial planing of one’s future.