Play Lottery or Invest in Stocks?

If you only pay attention to the average person, you might believe that investing money in the stock market is the same as playing the lottery. After all, stocks seem to go up and down with very little reasoning behind the movements. Every day on the news there is another story of someone making millions of dollars off of a single lucky trade. What exactly is the difference?

The difference between playing a lotto and investing in stocks is that strategy actually works in the stock market. Although the news will always report on winners in the lotto and in the stock market, what the news does not report is that there are many more everyday winners in the stock market. There are none in the lottery. In short, the lotto winner that you hear about on the news is the only winner in that case. This is not the case with investing in securities.

First of all, investing in securities is a much more complex proposition than simply scratching off tomatoes trying to wish a number in place. Companies have reports and calls that you can participate in so you will be able to see where stock may go in the future. There are laws in place detailing how companies must be transparent with their information, hiding no overbearing risks from potential investors.

There are many strategies that you can take into account such as strategies with options that will keep you from taking too far of a loss. You can program computers to automatically limit your losses and take your winnings as soon as they reach a certain threshold. In short, there are many different ways in which you can control your destiny in the stock market. The lottery is pure luck, and there is nothing more to it than being lucky if you win it.

What the average person will not tell you is that an investment in the stock market is a long-term investment, not a fly by night, second by second hoax. As a matter fact, over the long-term, most people actually come out ahead in the stock market by simply buying certain blue-chip stocks and holding them. For many people, their retirement plan is based on stocks that they may have forgotten about for decades at a time.

Stocks are a smart way for people to make money. The lotto is called a “poor tax” for a reason. Never think that the two are the same.

Jonah Engler is a successful entrepreneur, investor, franchise owner and coffee lover who hails from New York City.