Difference Between Gambling and Speculation

Gambling vs Speculation
 

Gambling and Speculation are popular among those who are interested in making easy money. One cannot deny that money runs the world today. People always thrive to profit, and the easier it is to earn money, the better. With that mindset comes the popularity of gambling and speculation. However, what one might overlook is the fact that even if these two activities seem to have the same goal, several differences do exist between gambling and speculation.

What is Gambling?

Gambling can be defined as the wagering of means on an uncertain event with the aim of gaining additional assets or money. This act is usually carried out in casinos, via lotteries and slot machines while illegal gambling is also carried out all over the world. Gambling requires elements such as consideration, chance, prize, and its outcome makes itself visible within a short amount of time.

The most striking factor about gambling is that only a small amount of money must be paid in anticipation of a large sum of money. One can take the example of the lottery, which requires a fee of a small amount and yet a jackpot of a stupendous amount in return.

What is Speculation?

If one wants to increase his chances to profit one might try to speculate. Just like investment, speculation can be defined as the practice of risky financial transaction with the aim of gaining profit from short or medium term market value fluctuations. In this practice, very little attention is paid to the fundamental market value of a security whereas focus is shed upon price movements. It is also defined as the act of placing funds on a financial vehicle with the intention of getting satisfactory returns over a small amount of time. Speculators show an interest in bonds, stocks, commodity futures, fine art, collectibles, currencies, real estate, and derivatives.

What is the difference between Gambling and Speculation?

Gambling and Speculation are similar in the manner in which they can acquire profit in a short amount of time. However, both these methods are risky enterprises that require one to employ one’s hard earned money in a not-so-stable practice.

• One would need skills to become a good speculator. There are so many factors one would need to study and master to excel in this area. While, gamblers prosper just because of plain luck.

• Gambling is a higher risk activity when compared to speculation. Speculation is a relatively lower risk activity if one studies and practices the art of  speculation enough.