There's no such thing as a sure thing when it comes to gambling or investing. But that's where the similarities end between the two. While gambling is all about taking risks for a quick payoff, investing is a strategy intended to help your money grow over time. That's why investing for kids can be a smart move—because they'll have so much time on their side.
Even if you're a little nervous because you don't fully understand the investment world, that's OK. With the right tools, such as GoHenry's in-app Money Missions, you can learn the basics and share those lessons with your kids.
Investing vs. gambling
If you're new to investing, you might assume it's not all that different from gambling, especially when people use terms like “play the stock market." But the good news is when you invest wisely, you'll have much better odds of winning than you do with gambling.
With gambling, you make a wager, whether it's in a card game, on the outcome of a sporting event, or at a slot machine. If you're lucky, you'll get a great hand, your sports prediction comes true, or you'll hit the jackpot and come out a winner. If not, you're out that money.
Though it may feel like you're “betting" on certain funds or stocks when you invest, it's not the same as gambling because you're actually buying shares or small pieces of ownership. So even if you “lose" money in the short term, that investment is still yours. You could decide to sell it and buy something else with more promise, or you could hold onto it and see if it bounces back. In fact, studies show that people who buy and hold investments usually make a profit.
The other key difference is that you can keep tweaking your investment strategy to reflect your goals. For example, when you're investing for kids, you have plenty of time for that investment to grow so you might choose to be more aggressive than someone who is a couple of years away from retirement.
Investment opportunities for all
There are different types of investment opportunities and a range of available options from low risk to higher risk. For example, you can invest money in longer-term accounts like a 529 college savings account or an IRA, or you can purchase stocks in a brokerage account for more hands-on investing. Taking the time to explore all the available options can help you make sound decisions and build wealth.
Ultimately, what makes investing a much better use of your money than gambling is the power of compound interest. While gambling is making a wager and then seeing what the outcome is, when you invest money, it's more like planting a seed that can grow exponentially over time. That's why investing for kids can be so lucrative—you can help them start building wealth from a young age with even small contributions.
Once you have a good handle on how investing works, start teaching your kids about the stock market and other investment opportunities to set them up with a strong financial foundation.