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


Recommended

by NEWSROOM AI
Read More
How to get rich by investing in smoking hot US and Canadian dagga shares

How to get rich by investing in smoking hot US and Canadian dagga shares

Returns of 500% are not unheard of. Is this another crypto-like bubble? Not in the least, says Financial Advisor Warren Ingram.

Millennials – contrary to the stereotype - are very, very good with money

Millennials – contrary to the stereotype - are very, very good with money

Life is really hard for young adults, but they’re more than coping. Old Mutual research suggests older adults can learn from them.

Worried about money? How to have a courageous chat with your spouse about it

Worried about money? How to have a courageous chat with your spouse about it

Life planner Kim Potgieter shares five tips on navigating the complexities around money and relationships.

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
[LISTEN] New Visa regulations could change the face of South African tourism

[LISTEN] New Visa regulations could change the face of South African tourism

Lecturer at TUT's Dept of Tourism, Unathi Henama says that the tourism sector is at the center of the economic policies in SA.

10 killed in Limpopo bus accident

10 killed in Limpopo bus accident

Russel Meiring says it is understood that the bus overturned on the N1 highway between Polokwane and Mokopane.

How to get rich by investing in smoking hot US and Canadian dagga shares

How to get rich by investing in smoking hot US and Canadian dagga shares

Returns of 500% are not unheard of. Is this another crypto-like bubble? Not in the least, says Financial Advisor Warren Ingram.

[Watch] Dad breaks down when reunited with car sold to pay wife’s bills

[Watch] Dad breaks down when reunited with car sold to pay wife’s bills

Khabazela shares some of the most popular tweets, posts, and videos on 'What's gone viral'.

[WATCH] Is it a cow's penis or an udder? Well, this kid thinks it's a penis

[WATCH] Is it a cow's penis or an udder? Well, this kid thinks it's a penis

Check out the videos, tweets, Facebook posts that have gone viral and why this kid cheered her dad on in the toilet.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...