Is investing in financial markets a gamble?
I read about the 90-90-90 rule aka 90% of the people lose 90% of the money in 90 days.  Anything that happens in 90 days or less is speculation (effectively gambling), not investment. And the 90-90-90 thing sounds around right for inexperienced amateurs going up against professionals in that space. I don't know anyone who actually made significant amount money by investing in stocks or other financial products except those appearing in TVs. Lots and lots and lots of people do.  I heard that people who actually encourage common people to invest in stocks are stock brokers and fund managers who actually gain by the fact that more people invest.  No. It's true that lots of people will give you advice to by specific stocks or financial instruments that will earn them comission or fees, but the basic idea of investing in the stock market is very sound; ultimately, it's based on the ability of companies to create value and pay dividends. Could you please give some valid reasons to invest in stocks or other financial market. Thank you. Well, what else can you do with your money? Put it in an interest-bearing bank account? Effectively, you'll still be investing in the stock market, the bank is just taking most of the returns in exchange for guaranteeing that you'll never lose money even temporarily.
"I think that the answer by @jkuz is good.  I'd add that the there's a mathematically precise difference:  Gambling games are typically ""zero-sum"" games, which means that every dollar won by one person is lost by another. (If there's a ""house"" taking a cut then it's worse than zero-sum, but let's ignore that for the moment.)   None of the markets that you mentioned are zero-sum because it's possible for both parties in the transaction to ""win"" since they typically have different objectives.  If I buy stock, I typically desire for it to go up to make money, but, if I sell stock, I typically sell it because I want the money to do something else completely.  The ""something else"" might be invest in another instrument if I think it's better or I'm rebalancing risk.  It might also be to buy a house, pay for college, or (if I'm in retirement living on my investments) to buy food.  If the stock goes up, the buyer won (increased investment) but the seller also won (got the ""other thing"" that they wanted/needed), which they would not have been able to get had there not been a buyer willing to pay cash for the stock. Of course it's possible that in some cases not everyone wins because there is risk, but risk should not be considered synonymous with gambling because there's varying degrees of risk in everything you do." "OneTwoTrade is a binary option seller, and they are officially licensed by the Malta Gaming Authority. They are not in any way licensed or regulated as an investment, because they don't do actual investing. Is your money safe? If you mean will they take your money and run off with it, then no they probably won't just take your deposit and refuse to return any money to you for nothing - that would be a terrible way to make money for the long-term. If you mean ""will I lose my money?"" - oh yeah, you probably will! Binary options - outside of special sophisticate financial applications - are for people who think day trading has too little risk, or who would prefer online poker with a thin veneer of ""it's an investment!""  In the words of Forbes, Don't Gamble On Binary Options:  If people want to gamble, that’s their choice. But let’s not confuse   that with investing. Binary options are a crapshoot, pure and simple. These kinds of businesses run like a casino - there's a built-in house advantage, you are playing odds (which are against you), and the fundamental product is trying to bet on short-term volatility in financial markets. This is often ridiculously short-terms, measured in minutes. It's often  called ""all or nothing options"", because if you bet wrong you lose almost everything - they give you a little bit of the money you bet back (so you will bet again, preferably with more of your own money). If you bet correctly you get a pay-out, just like in craps or roulette. If you are looking to gamble online, this is one method to do it. But this isn't investing, you are as mathematically likely to lose your money and/or become addicted as any other form of money-based gambling, and absolutely treat it the same way you would a casino: decide how much money you are willing to spend on the adventure before you start, and expect you'll likely not get much or any of that money back. However, I will moralize on this point - I really hate being lied to. Casinos, sports betting, and poker all generally have the common decency to call it what it is - a game where you are playing/betting. These sorts of ""investment"" providers are woefully dishonest: they say it's an exciting financial market, a new type of investment, investors are moving to this to secure their futures, etc. It's utterly deceptive and vile, and it's all about as up-front and honest as penny auction websites. If you are going to gamble, I'd urge you to do it with people who have the decency to to call it gambling and not lie to you and ask for a ""minimum investment""." "It's not at all different from anything that happens in reality. Everybody deals with risk and uncertainty, everybody worries about the future, and everybody puts their best mind to bear on it. You gamble, you hedge your bets, you try to do your best with what you've got and what you're willing to give up. People who aren't in the financial industry can also think about their goals in a fine-tuned, strategic, mathematical way. Being able to accurately model reality is useful for pretty much everything.  The way in which it is actually totally different is not addressed. People who deal in derivatives can do a very precise job of predicting the future. So can astronomers, bullfighters, and migratory fish. The difference is that people who deal in derivatives have the ability to leverage reality to obtain a preferred future reality in a uniquely influential way. The guy is acting like investment banks live up on a mountain and look at tea leaves and send down memos about securities once a year.   &gt;Changing the shape of the graph is in some loose sense the business of the financial system, particularly the big investment banks, which are sometimes thought of as ""dealers in risk.""   So are drug dealers. But the guesses investment banks make about the future affect the actual future of investment banks in a way that isn't available to, say, cobblers, so they are dealing with much less of their own risk than most people.   &gt;Buying and selling derivatives means consciously trafficking in risk and uncertainty, in a relatively uncut form. This makes it interesting to people who don't buy or sell derivatives for a living, but who are curious about risk and uncertainty.  It also makes it interesting to people who are curious about why their lives are affected by the the risk and uncertainty of people who trade in derivatives." "It is a binary options market licensed by the ""gaming authority"" of Malta. One of the most liberal ""pay to play"" jurisdictions in the European Union. It sells access to tighter regulatory regimes. This is distinctly a gambling website, not licensed or protected by securities regulations. But that aside, even if they were able to masquerade more as a financial service, none of that dictates whether you will lose your money. Therefore try to find reviews from people that already use the site. This is not investing, a distinction I am able to make because no product they offer has positive expected value. Cash settled binary options do sound like a lot of fun though! And maybe you can make successful predictions in the allotted time period of the option. The things I would expect are issues withdrawing your funds, or unexplained fees." "Taking examples from this loosely Googled page: http://www.fundlibrary.com/features/columns/page.asp?id=14406 If you find, or calculate, the standard deviation (volatility) of the returns from your various investment classes you will find they range from low-risk (low volatility), such as Cash, to high-risk (high volatility), such as Strategic Growth.  The risk rating (volatility) is a good indicator of how reactive to market conditions your investment is likely to be.  As you can see below, from mid-2010 to mid-2011 the High Risk index performed really well, but it was also most reactive when the market subsequently turned down.  The medium risk indices performed the best over the chart period, 2010 to 2013, but it could have turned out different.  Generally, you choose your investment according to your ""risk appetite"" - how much you're willing to risk.  You might play safe with, say, 30% cash, 60% medium risk, 10% high risk.  (Then again, are you paying someone to manage cash, which you might be able to do for free in a bank?) Assuming, for a moment, European (3.) and Intnl Equity Tracker (9.) had the same medium risk profile, then holding 50% & 50% would also add some currency diversification, which is usually advisable.  However, the main choice is down to risk appetite. To address your specific question: ""my main interest for now is between Stockmarket Growth and Strategic Growth"", first thing to do is check their volatilities. For a further level of sophistication you can check how they are correlated against each other.  If they are inversely correlated, i.e. one goes up when the other goes down, then holding some of each could be a good diversification. FYI: An Introduction to Investment Theory The historical returns are important too, but the investment classes your pension fund is offering will probably be reasonably aligned on a risk-return basis.  You should check though.  I.e. do they line up on a plot of 3 year Return vs Volatility? e.g. the line through SA Cash - SA Bonds - Vol Target 20 - SA Equity.  Source" You can do some very crafty hedging with the variety of options.  For instance, deep out of the money options are affected more by changes of market volatility, knowing this you can get long or short vega very easily, as opposed to necessarily betting on changes in the underlying asset. &gt; There are plenty of people that consistently beat the market. If the market were truly efficient, then everyone should just passively invest, which would make the market inefficient, leading to active investment.  Passive investing  a.) Doesn't mark the market *less* efficient, I don't know how you came to that conclusion.  b.) There is not a big group of people who consistently beat the markets. There's a tiny, *tiny* sliver of a fraction of a portion of a group of people that beat the market over any ten year period, which is *consistent* with pure randomness. You're statistically likely to say those kinds of anomalies. In fact, it'd be stranger if we *didn't*.  c.) The markets aren't *truly* efficient. They can't. There's imperfect information. The point is the potential exploits cannot 1.) be exploited on scale, because that creates market efficiency, and cannot 2.) be public, because that also creates efficiency. As more and more exploits are found, we're eliminating all these black swans. If you compare all 400 professionally managed mutual funds, only 2 have ever beaten the market, and by less than 50 basis points. That's 0.5%. That's not even consistent with randomness, that's worse than random. It goes to show how few and far between any potential exploits exist. It's simply not worth your time as an investor, because if giant firms employing hundreds cannot find them, a handful of people won't be able to find them by anything other than chance. It's almost always better to passively invest.  You can read more about this, because while intuitively you may feel active investment can be better, the numbers don't lie and I promise you you're very wrong. "Why must terms must be mutually exclusive?  This (false) dichotomy is what seems to cause the most debate.  It is the SINGLE EVENT OUTCOME that defines gambling. Gambling will involve an aleatory contract. That is, the outcome is specifically tied to a single event that determines profit/loss. This could be the outcome of a race or the roll of a dice, but should involve chance.  This is why gambling is often in the context of a game, but I would make the argument that some investment tools fall into this category - The price of a stock at a certain date, for example. This may also be called ""betting"", which opens up a whole other discussion. Investing has no such implication, and as such it is the broader term.  Investing is to put something (money) to work to return a profit. Some forms of gambling could fall under this umbrella. Some would say that is a ""bad investment"" and even if they are right, it may still be the desire and intent of the investor to make a profit.  Not all gambling falls under investing. You can gamble for pleasure.  The profit/loss of most investments are not contractually tied to a specific event or outcome (e.g. the price of a stock over 10 years is the result of many events affecting its market value). Such an investment would not be considered gambling."