Money Management

More Than Half of Americans Think Investing as Risky as Gambling

Written by Guest Post

Everybody has mixed feelings about Lady Luck. She can be your best friend or your greatest foe. Some people jump at the opportunity to test their luck, while others always play it safe — either when it comes to gambling or when investing in the stock market.

A recent survey conducted by MagnifyMoney, a subsidiary of LendingTree, revealed that 55% of Americans believe that investing is as risky as gambling. Before digging into what else it revealed, it’s important to understand the context of how this survey was framed.

We surveyed over 1,000 Americans. Gamblers here are defined as people who had gambled in the traditional sense in the last 12 months, such as playing a game at a casino, buying a lottery ticket or betting on sports. People defined here as non-gamblers did not take any of those actions. Meanwhile, active investors are defined as people who buy or sell investments once a month or more, whereas passive or hands-off investors are defined as people who buy or sell investments less often.

Key findings:

  • 55% of respondents think investing is as risky as gambling.
  • Our survey suggests gambling can lead to secrecy: More than 3 in 10 men have gambled without telling their spouse or partner.
  • Meanwhile, 1 in 5 Americans own an investment account that they haven’t told their spouse or partner about.
  • One in 4 respondents think the odds of making money in the stock market are the same as the odds of making money from gambling. Only 1 in 10 think the odds of making money from gambling are better than from investing.
  • Three in 10 respondents think investing in cryptocurrency is a form of gambling. Those who are 74 or older are the most likely to view cryptocurrency as a form of gambling.
  • For some, gambling and investing go hand in hand. Active investors are more likely to have gambled in the past year and they spend more on lottery tickets and gambling.
  • 72% of gamblers are currently investing in markets, whereas only 56% of non-gamblers are currently investing.
  • 57% of gamblers are active investors compared to just 30% of non-gamblers (“active investors” are defined as ones that make at least one trade per month).

How different generations view gambling

There are marked differences in the attitudes that members of different generations have about gambling. Baby boomers are more likely to be willing to gamble than millennials. If given $1,000 to spend for fun, 19% of those surveyed overall reported that they would rather gamble than invest. But that number was higher when you looked at just baby boomers, 28% of whom would choose gambling. Meanwhile, millennials would prefer to play it safe, as only 16% would choose gambling over investing.

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The most popular form of gambling among those surveyed was buying a lottery ticket; 59% of respondents said they had played the lottery in the last 12 months. When it came to spending more than $200 a year on lotto tickets, once again baby boomers’ numbers were higher. Nearly 8% of baby boomers reported spending more than $200 a year on lotto tickets, compared to 4% of millennials.

Gambling habits aside, baby boomers are still more likely than millennials to believe the odds of making money through the stock market are better than the odds of making money by gambling.

What is the difference between gambling and investing? 

Overall, respondents mentioned chance, risk, and return as the main differences between gambling and investing. However, a significant number of respondents said there was no real difference between the two.

Some view investing in a fairly pessimistic light: One respondent felt that gambling and investing are one and the same, stating “There is no real difference, you stand to lose in both or you could win in both.”

Most respondents admitted that investing, whether or not it works out, can be less risky. “I’ve always considered the stock market the world’s biggest casino,” one respondent said. “However, if used wisely, it is considerably less risky than gambling.”

Many saw the risks of investing as lessened by the fact that you can arm yourself with information to help you succeed in the stock market. “With investing, while there’s no guarantee of a return, there are a number of factors that increase the likelihood of earning a return,” remarked one respondent. “On the other hand, with few exceptions, gambling relies on purely random factors.”

Misgivings aside, when asked what they are currently investing in, the second highest response was “stocks” at 29%, which was topped by “retirement savings” at 40%. It is worth noting that many retirement savings accounts are made up of stocks.

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Active investors vs. passive investors

Interestingly enough, there seems to be some correlation between active investors and secrecy when it comes to gambling: 45% of active investors have gambled without telling their spouse or partner about it. This compares to only 14% of passive investors who have kept their gambling habits a secret from their partner.You might believe this secrecy is bred by shame about gambling, but 45% of active investors also reported having an investment account that their spouse or partner was not aware of, so just as many active investors kept their investments a secret as their gambling. Only 6% of passive investors keep their investment accounts a secret.

Men vs. women

When it comes to secrecy surrounding gambling and investing, men are much more likely than women to hide their activities. Thirty-one percent of men have gambled without telling their spouse or partner. Only 15% of women have done the same. The same theme continues for investing: 21% of men have a secret investment account, compared to only 14% of women.

Men also tend to spend more on all forms of gambling each year, at every price point. In regards to lottery tickets, 9% more men than women spend more than $200 each year on lottery tickets.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,082 Americans. The survey was fielded July 22-26, 2019, with the sample base proportioned to represent the general population.

We defined gamblers as those who have taken at least one of the following actions in the last 12 months: played a game at a casino, played an online gambling game, played poker with money, and/or bet on sports, while non-gamblers have not taken any of those actions.

We defined “active investors” as those who buy or sell investments once a month or more, while “passive investors” buy or sell investments less often.




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