Finally, sports betting will be legal in North Carolina on March 11! Gambling on sports is nothing new. We’ve all participated in our office pools. I remember filling out March Madness brackets as far back as seventh grade, with each game being worth around a quarter. A perfect bracket was worth about thirty dollars, which was a nice pay day for this frugal kid.
Now, thirty dollars seems like nothing at all, but it was still fun. Today, there are online contests promising millions of dollars in prizes to anyone who can create the mythical perfect bracket.
Regardless, of where you stand on whether sports betting is right or wrong, I think we should discuss the opportunities and dangers we are about to face. This post will compare gambling with investing.
Next month we’ll go over some basics about gambling, so you can make informed decisions if you choose to play. As with many things in this world, overindulgence can be dangerous. Be sure to familiarize yourself with the NC Lottery gambling support resources before you play.
Before you participate in sports betting, let’s talk about the difference in gambling and investing.
One thing gambling and investing have in common is that you shouldn’t do either unless you are willing to lose money. However, that is where the similarities stop. I personally feel insulted when someone puts my life’s work in the same category as gambling.
Unfortunately, many people tend to believe that gambling and investing are the same. It’s understandable as both can be risky and result in losing money, but they are very different. While
gambling is all about entertainment, investing is about ownership.
When you invest in a company, you become a part owner in that company. In ancient times, like the 1990’s, shareholders actually received a piece of paper verifying their ownership. They looked like the fancy certificates children receive on awards days at school.
I have one from where my grandpa invested in a farm co-op, but it’s more of a cool keepsake than an investment. Technology has made paper shares obsolete, but the rules still apply.
By investing you are purchasing the opportunity to share in a company’s future profits. Technically, as a shareholder, you could go to annual meetings and try to influence the direction of the business. Most shareholders, however, prefer to stay on the sidelines and just buy or sell the company’s stock.
Unlike sports betting and gambling, investing in stocks or bonds should be treated the same as buying a home or any other physical property.
Even though you cannot see the shares or hold them in your hands, they are still on the assets side of your balance sheet with your other valuable property. I think people tend to believe buying real estate is a less risky investment than stocks because they can actually see the property. We all have the dream of buying a rundown home, fixing it up, and selling it for a huge profit.
I would argue that this type of investing is even more risky. To buy property, most of us would need a loan. Then we would have to make payments on the loan, pay property taxes, pay for insurance, and pay for all of the renovations. On top of all of that, you’ll have to deal with a bunch of people throughout the process.
Then, after sinking your life savings in this project and having numerous arguments with your spouse, you have to try to sell the house. You may find a buyer or you may not, but it sure seems like a gamble to me. Just writing this scenario has me stressed out for you!
Similar to sports betting and gambling, investing is easy to start.
Do you know what it takes to invest in the stock market? Honestly, a smartphone is all you need. Yes, there are apps available that allow almost anyone to trade stocks. Of course, you should use a licensed professional, preferably me (link), in order to try and mitigate as much risk as possible. There is nothing wrong with having someone help you navigate the world of investing.
When investing with a professional, you’ll just need to put money in the account and let us do the work. Depending on the account type, your money could be transferred back to you in mere hours. Sure, you can gain or lose investing in stocks as in real estate, but which scenario seems easier to you?
Understand I have nothing against real estate being a part of your total portfolio. What I don’t like is when middle class families are convinced that “flipping houses” is the only way to get ahead. Life is hard and stressful enough, so why would you add more work to it? Let your money have a chance to work for you!
Before you respond about all of these rich people in the news buying real estate, remember that most are already rich from other investments. We all need heroes, so feel free to admire people like Bill Gates and Elon Musk. However, buying real estate just because they’re buying land seems shortsighted to me. They may just be doing it for tax reasons.
I chose this career because I firmly believe that all people can experience some level of financial independence. That point is different for everyone, but I do think investing in the stock market is the key to helping us reach that point.
Sports betting and gambling in general is first and foremost a form of entertainment.
When we take a vacation, we want to be entertained. Vacations can be built around gambling. Why else would you go Las Vegas? Sure, there are shows and activities for the whole family to enjoy, but let’s be honest, the backbone of Vegas is gambling.
I would love to strike it rich or win a jackpot like anyone else, but I wouldn’t plan a vacation around gambling. Casino games don’t really appeal to me, but I can see how others enjoy it. On one of my wheelchair hockey trips to Philadelphia, my parents and I visited the casino in Dover, Delaware.
Mom and I enjoy watching horse racing on television, so we wanted to experience it live. We went during the week, so it wasn’t crowded. I was able to go directly to the betting window and the
lady was patient with me being a rookie.
I don’t look at gambling that day as a waste of money. Honestly, it was one of the most enjoyable experiences of my life. I can put a value on horse racing because it was entertaining.
Opportunity cost is vital in sports betting, casino gambling, and other forms of entertainment.
When we go to a sporting event, we normally purchase a ticket to attend. The price of the ticket can be considered as your opportunity cost.
Opportunity cost is a business and economics formula that allows managers to assign a value to their decisions. As the CEO of your home, you can use the same formula in daily life.
Your opportunity cost equals what you’re giving up (money) divided by your personal value of what you gain (attending an event). Personal value is very important here. If you have no interest in a product, service, or event, then there is no monetary value to you.
For example, if I have $100 and must choose between a Hurricanes hockey game or a concert, hockey would get my money. Fortunately, there are infinite options on which to spend our money. Unfortunately, our financial resources are limited, so all decisions should be weighed with a formula like opportunity cost.
If you enjoy card games, then $10 to play Blackjack is a fair value to you. However, the same $10 to play a slot machine may seem like you’re wasting your money. If placing a bet on a team to win helps you enjoy a sport even more, then by all means have some fun!
Before you choose to gamble, remember the value comes from the entertainment you receive from placing the bet.
If you are gambling as a way to get rich and solve your financial problems, the odds are not in your favor. On the other hand, we invest with a long term purpose, which is our clearly defined, reasonable financial goals. Investing may be entertaining for a nerd like me, but that is not its purpose.
Investing is a piece of your overall financial plan. The financial plan is a beautiful thing. It is a combination of science, math, and art. It provides with a chance of reaching our goals.
We may fail or we may succeed beyond our wildest dreams. We cannot tell the future, but I believe we can be better prepared with a financial plan. Investing in your future is one of the most important things you can do in life. The real gamble is not embracing the opportunity to build a better future. Email me!
