Are You Investing Or Gambling?

Yves SchoofBusiness

It seems that everyone has now jumped on the ‘investment’ bandwagon. It has never been easier to open a trading account with low fees, and trade shares or ETFs all over the world.

The popularity of ETF’s in particular keep rising and there has been a proliferation of different investment products.

BUT…the question you have to ask yourself is, are you investing or speculating?

You can read all the books and share trading newsletters in the world, but still make costly investment mistakes.

The main concern I have is that many people are gambling or speculating, whereas they may feel they are investing.

There is a big difference. Let me explain.

Investors take the long view on the basis that a company’s share price will increase based on improvement in its fundamentals, such as earnings/profit and cash flow.

With speculation, the buyer is betting that someone will buy the investment from them at a higher price in the short term. It’s called the Greater Fool Theory.

Share markets have historically rewarded investors who take a long-term view.

In fact, to manage share market volatility, anybody investing in shares or ETFs should take a long-term view of at least 7-10 years and be prepared to hold on to their investment when the market goes through its normal ups and downs.

Speculators typically trade more frequently and hold investments only for a short time, while they scour the internet for get-rich-quick investments. Unfortunately, this strategy typically goes unrewarded and may even lead to substantial losses for the novice investor.

So, before you jump into the share market, ask yourself whether you are in fact investing or gambling?

Yves Schoof
Follow me

Yves Schoof

Author | Specialist Adviser for Medical Specialists and Surgeons at Affluence Private Wealth
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.

Please contact me on yves@affluenceprivate.com.au or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on LinkedIn to receive new articles.

DISCLAIMER
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. 

The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs.
Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
Yves Schoof
Follow me