I wholly agree with the inability of most to assess risk and reward. Even if they do they frequently fail to understand the benefits/implcations of spreading risk appropriately.
Investment suggests an objective assessment of risks and potential reward where a knowledge of fundamentals can impart intelligence possibly not evident to others.
Gambling is fundamentally different - it tends to be a zero sum game with the odds stacked in favour of the house. Horse racing, cards, roulette are all examples. Few can consistently profit but (sadly) many get addicted.
There may be little difference between gambling and investment at the margins. A bet on the horses is an ill-informed gamble for me. For others it may be the product of horse racing knowledge, study of form, conditions etc.
It may be economically illiterate, but investment in assets which generate an income, meet a fundamental human need, and tend to be less price volatile seem more attractive as one ages - eg: housing, farmland, energy generation, some materials.
At the gamble end are those which are remote from a real need - eg: gold, gemstones, art, cryptocurrencies. They have a value in that people will pay to possess them, even if their value is not sustained by any fundamental need. (is beauty, design etc a need??) They are inevitably very volatile.
|