Investing vs. Gambling

Advisor with dice

Many skeptics who have never invested in the stock market before proclaim that investing is just another form of gambling. This misinformed view has kept too many from enjoying the financial rewards of investing; particularly in the United States economy, which generally, over the long run, has been profitable (Investopedia, 10-year U.S. Treasury Bonds).

Let’s look at some different games of chance, and their percentages compared to the positive return periods of the S&P 500 Index. Odds may vary slightly from casino to casino and during promotional initiatives, but generally these odds apply and reflect the player’s disadvantages when playing these games.

Baccarat 1.36%
Video Poker 5%
Roulette, Double Zero 5.26%
Slot Machines 15.20%
Single Die Roll on Number 6 16.7%
Coin Flip, Heads or Tails 50%

Below is a chart that shows the annual percentage change of the S&P 500 index from 1927-2016. Out of 89 periods, 61 were positive (68.6%). Here’s why investing your money might be a better option for those looking to increase their wealth, rather than playing a slot machine or going all-in on your favorite number at the roulette wheel.

S&P 500 Index from 1927-2016

Source: Macrotrends

Understanding Risk

Investing involves risk, but by building a diversified portfolio with stocks and bond mutual funds, you can balance out your risk. In other words, you’re not betting it all on one investment or putting all of your eggs in one basket. If one investment goes down in value, you’ll have other investments that may hold steady and keep your portfolio afloat. 

At Petersen Hastings, we take an academic approach to investing that is based on Modern Portfolio Theory (MPT). The general idea of MPT is that by diversifying investments, you can minimize risk. To learn more about our investing philosophy, visit

Invest with a Plan

Gamblers hope for a quick win. Investors want to build wealth over time. Fast money sounds great, but it isn’t an actual plan to get you to your goals. 

Rather than just “win big,” many investors have a specific plan as to what they’re investing for in the long term. Whether it’s saving for retirement or a child’s college education, your investments should align with your goals. Once you have a plan in place, you can adjust your portfolio according to your time horizon. 

The Bottom Line

Certainly, some investments may not work out as well as hoped, but which would you prefer: to invest your life savings in a diversified investment portfolio where historically returns have boasted positive performance or let it all ride at the roulette or blackjack tables where results could be disastrous?


1Past performance does not indicate future results.

2This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Petersen Hastings assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.