The difference between speculative investing and gambling
People often compare investing to gambling but it’s not the same. The differentiating aspect between the two is the risk premium that comes with speculative investing. Let’s break that down.
There is always a base return that you can earn when you want to invest. Say you invest in a government scheme in your country - like a fixed deposit scheme or maybe a bond issued by the government. Unless you’re from a country with a very unstable economy (like Argentina, oops), there is a VERY good chance you will earn the amount you are promised when you invest in these government schemes.
These earning opportunities are usually around the interest rates set by the government (in most western markets - this is currently hovering in the 4-5% ranges) and are considered the safest investments around. This is the base rate your money could be earning by itself.
This means that any decision you make to invest outside of these safe investments should generate a return greater than the rate these investments can generate. The simple concept being - if you’re taking additional risk, you should be rewarded for that risk. That additional amount that you generate on top of the base rate is called your risk premium.
So when you invest in a stock or a crypto token with an investment thesis and an understanding of what return that might generate for you that is in addition to the safe investment you could have made, you are doing speculative investing. Now I hope you are doing your research and not just yolo-ing everything.
If you are just investing in assets without an understanding of what return it can generate for you and why that’s a better place to invest vs. the safe investment available to you, then you are gambling your money away. Good luck with that.