Hi everyone, today I have a guest post for you.

To many people, Investing, Gambling and Entertainment might seem like activities with clear boundaries. Everybody knows the difference between them, right? Well, the reality is that each one of these pastimes can look very much like the other. When figuring out how to use your money, for enjoyment and profit, it’s important to understand how much of each one of these you are paying for.

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  • Investment. It’s common knowledge that low cost mutual funds offer long term reliability regarding growth. There are also a lot of benefits to adding equity to your home, then selling or renting it out. Both are sound investment strategies, with a touch of speculation involved. Neither is without risk. In reality, you are making a gamble in both of these scenarios that 1) the market isn’t going to crash right before you need your money, plus returns, and 2) that your house, your neighborhood, your region is going to retain its value and gain more, before you go to rent or sell. With mutual funds, you experience minimal risk but also have less chance for great reward. Contrast this with something like iForex, where you are investing money predicting the growth or loss of currencies. It features more risk, but also more reward. But investment in all its forms can also share a lot in common with…

 

  • Gambling. Spread betting and all forms of casino gambling are an interesting financial reality. For one, they can be played with skill. There are professional gamblers who make a killing every year, due to their understanding of markets, odds, and other players’/investors’ behaviors. Then there is everyone else who does not win big. Their losses are what drives the industry and its profits. Most financial advisors would not tell you to sink much of your money into gambling (unless you are really, really good at it, I suppose). But for those who gamble modestly and do so with spare cash just to have a little bit of fun, it is just another form of…

 

  • Entertainment. All of us spend money to amuse ourselves, keep our minds busy, see and experience interesting and novel things. For many, gambling scratches this itch. So does more traditional modes of investment. Think about it, rather than sinking money into movie tickets, fancy trips, and media subscriptions, many people get their kicks by having wins and losses  gambling, very similar to how some people see investing. An element of enjoyment is often what is required for someone to stick with gambling or investing, otherwise it would seem like work. Without that aspect of entertainment present, you aren’t likely do very well at either. You have to enjoy the risks inherent in both, delighting in finding ways to beat the system.

 

If you want to have the best chance of growing your money, you’ll have to have all 3 of these bases covered. Without being something of a gambler, you won’t grow your money very quickly. Without being an investor, you won’t know how to grow your money wisely, and are likely to lose it all. Without deriving entertainment from the process, you won’t be as interested in the whole thing to make it work for you. When you look at how you spend your money (especially if you are interested in making more money), make sure that each of these factors is represented, and that no one factor is out of proportion. Together, the gambler, investor, and entertainment addict inside you can work well together to make money.

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