Are You Investing Or Are You Gambling?

Many forms of investment come with their risks. However, there’s a big difference between investing your money and gambling it. Just like betting money on horses or playing roulette, it’s possible to gamble away your money on the stock market or on crypto by making the wrong choices. With help from experts like Homer Sun, you can ensure that you are making the investments in the right way. This will allow you to determine where your money is going and ensure that it’s going the right way before it grows the right way.

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Below are just a few questions to help you determine whether you’re investing your money wisely or gambling it away.

Do you really know what you’re investing in?

It’s never a good idea to invest in things you don’t understand – especially if you’re throwing a lot of money into them. When buying a share in a company, you should always understand what that company does. Blindly buying shares in companies you’ve never heard of just because they seem to be up that day is not a wise move. Take the time to do your research before investing in something – whether it be a company stock, a property, a type of cryptocurrency or a collectible. If you don’t have the time to research, consider using an asset management company like Fundamental Global to handle your investments for you (just make sure to do your research when choosing a company to work with so that you choose a company you trust).

Have you put all your eggs in one basket?

Putting all your money into one investment is a risky move. You’re essentially going all in on something which could fail. This is why it’s so important to diversify your portfolio.

This involves investing your money into different places. A good investor will have money in savings accounts, money in stocks and maybe money in a few other instruments like real estate or collectibles or gold. If one investment fails, you’ve still got your other investments to rely on. There’s always a risk an investment could go south, however there’s much less risk of this happening to multiple investments.

Have you put in more than you can afford to lose?

You should never invest more money than you’re willing to lose. Technically, this is true with investing and gambling. However, gamblers are typically more likely to get carried away and take bigger risks.

Decide upfront what you’re willing to put into your investments and don’t exceed this. You shouldn’t be struggling to pay bills or taking out personal loans just because you invested all your money into something.

Have you put in measures to mitigate your losses?

When an investment starts to lose value, it’s important that you know when to pull out. This can help to mitigate your losses.

When it comes to stocks, you can often put in place stop loss orders or reminders, allowing you to sell stocks before they lose too much value. When investing in real estate, you may want to keep tabs on repair bills and tenant arrears so that you know when to sell a property that’s losing you money or evict tenants who aren’t paying. Having to pull out of an investment is never easy, but you’ll be grateful in the long run.