Ep. 30 Investing or Gambling? The Dangerous Trend No One Is Talking About

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Is it investing… or is it gambling?

With apps now offering options trading, short-term contracts, and event-based predictions, the line between investing and betting is getting blurry. Platforms are making it easier than ever to “predict” stock moves, interest rate changes, or economic outcomes and calling it investing.

But here’s the truth:
📉 If your success depends on being right right now, you may not be investing... you may be gambling.

In this episode of the NetWealthNest Podcast, Jim breaks down:

• The real difference between long-term investing and short-term speculation
• Why options trading and predictive contracts behave like gambling
• How trading apps profit from high transaction volume
• The psychology behind dopamine, loss aversion, and chasing losses
• Why beginners should avoid “adrenaline investing”
• What real wealth-building actually looks like

If you're working to break the paycheck-to-paycheck cycle, build your emergency fund, eliminate debt, and start investing the right way. This episode is for you.

Building wealth isn’t exciting.
It’s consistent.
It’s boring.
And it works.

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👉 Subscribe for practical financial education rooted in mindset, knowledge, and action.

Remember: Wealth is built through ownership and time — not predictions.
#investing #gambling #daytrading #optionstrading #longterminvesting #stockmarket #financialeducation #moneymindset #buildwealth #indexfunds #personalfinance #netwealthnest #compoundinterest #wealthbuilding

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Transcript

Jim 0:00

When does investing turn into gambling? Lately, more investing apps are offering ways to bet on what's going to happen next. Interest rates, stock movements, even economic events, and they're calling it investing. But these products look like investing, but they behave much more like gambling. Some of the things that I've seen out there recently are platforms offering options, trading, or future style contracts, or even event based predictions. Today we're breaking down what these products actually are, why they're dangerous for most people, and how to protect yourself if you're trying to build real wealth. So let's talk about what these products actually are or what the difference is in these products. So traditional investing is kind of owning a piece of, a business or an asset over time Predictions, whether it be option or futures or events are betting on short term outcomes, or an expected result. And so, you know, high level, what does that mean? What does that even look like? Well, will the stock go up or down in a very short amount of time? It could be in the next couple of hours or by, you know, Friday. will interest rates be cut next month by the Fed? there's kind of a key distinction between these two. You don't need the asset to win or lose in a lot of these situations, and you're profiting from kind of being right, not necessarily owning an asset over a period of time. These products are very often zero sum, where someone loses when you win and vice versa. It's not how long-term investing works, and that's the difference that matters. So why are you starting to see these on platforms? Robinhood just announced that they're, pushing out this and you can go on their site today and do some of these things. There are other markets that are doing this as well. The truth of the matter is, it's just the business that these companies are in. But platforms make money through a couple of different ways and high trading volume, frequent transactions and short holding periods are a great way for them to make money. They want people to continue to trade things or to move money around because they can charge transaction fees. They can do other different things that will allow them. To make money. They can also take predictive bets. Now, like a great example is will the fed cut the interest rate next month? You're seeing those types of things on these platforms where they're similarly playing like a casino and you are making a bet on if something is going to happen or if it is not. That's those prediction style products that they're starting to encourage and that is Something that can be very dangerous to many individuals because it is kind of a dopamine hit. Almost identical to what gambling is. It's just that you are making a different kind of bet. So instead of going to a casino and betting on, a hand of blackjack or roulette where it's either gonna be red or black or whatever you're betting on maybe an economic outcome on something, or if somebody is going to do something in the future, the reason that people like those is they typically repeatedly bet on different things, and there's emotional decision making in there. They might want something to happen and therefore they're going to bet for it The thing to keep in mind is that these products are all legal. There is nothing illegal about anything they're doing, just like sports betting is legal across the United States. Just like if you go to a casino, you can legally bet there as long as you're 21 or older. But legality doesn't mean it's suitable, especially for beginners or people that are on their journey to building wealth. What's profitable for a platform doesn't mean it's necessarily profitable for the end user, and that's something to always keep in mind. And so you might be asking yourself, okay, Jim, like why are we talking about this? Like, we've never really talked about this before. We've never talked about options training and we've never talked about gambling. We never talked about any of this stuff in here. And as it becomes more prevalent in these systems and easier to do. It is going to be a draw for some individuals who think that they can make money quickly. And so how this ties in is these products require timing, not patience. If you are betting, on a stock option, you might be betting if the stock is going to go up or down in a very, very short amount of time. It could be a couple hours, it could be a day, it could be three days, but it's not the traditional, I'm gonna buy this stock or this grouping of stocks and I'm just gonna sit and hold onto it for years and years and years and allow it to grow. it can punish emotional reactions, whereas You're more likely when you lose money over a short period of time to think that you're able to get it back just as quickly because you lost it in such a quick time. And so to use the example again, we kind of articulated to like sports betting as an example where somebody might bet on a game. That they think they know what the outcome's gonna be. It doesn't turn out that way. And there's another game happening a few hours later, or maybe the next day or the next week, and they're gonna bet on that game again 'cause they think they can get their money back. And that Does lead to some people spiraling and getting in a lot of trouble with their gambling. It's one of the reasons why you see, any type of gambling site has to put the one 800 number for gamblers anonymous on there and have a complete disclaimer on how gambling can be addictive. Because of the timing and the quick up and downs of emotions that leads to the addictive behavior in human beings to try to either get their money back or if they're winning, think that they're going to keep winning. And just like most, casino managers will say, the longer you play the game. The more likely you are to lose. It's kind of the same in here. It's one of the other reasons why you see a lot of, influencers on social media that talk a lot about day trading and buying their system and taking their course If they were making all their money from day trading, they probably wouldn't have time or be interested in teaching a whole lot of other people to do it. A lot of those influencers, as an example, make their money on selling a course because they're not making money on day trading or they might even be losing money. but they are trying to take advantage of the public's ability to be interested in how do I make myself wealthy quickly? For someone without an emergency fund that's carrying debt, that's new to investing, this is kryptonite. We want to stay as far away from these types of things as possible, and for those that have built an emergency fund that are really starting to look at investing. There is mathematical proof on both sides of this coin. The side where you're buying assets, whether it be in the stock market or other ways in holding onto them for years at a time, historically, has just proven to be a way to build wealth inside the United States. On the flip side of that, there are so many, examples of people who have given everything, all their wealth away, gone bankrupt by doing things like day trading or options or any of those types of things. It's just a really risky way and because there's high reward in the upside, it leads to chasing and more bets and continued losses over a long time horizon. And then there's the behavioral side of this. The dopamine response is just similar to gambling. And again, that loss aversion comes up where people start to double down when they lose. you can't compound money that's constantly being reset to zero. And if you research it, you will see, more often than not, you will reset to zero over and over and over again. And so what I like to help people with and remind people of as they work through their financial journey, they break out of the paycheck to paycheck cycle. They build their savings so that they don't have to worry about emergencies and have a three to six month runway. And then they work on the, how they're going to invest is have a mental filter around it and understand what, true investing. Could look like for you and then what gambling style trading could look like for you. The time horizon is much different in investing. You're talking a time, horizon of years or sometimes decades. It's typically strategy driven, meaning, you're buying usually a handful of stocks, or an index that is shown to grow over time. A great example of that is the s and p 500 index or a Dow Jones Index. It's based on ownership and cash flow of the asset, not timing the asset of when it's going to go up or down. here's the other key thing. You are usually gaining your wins through consistency, so you're not seeing instantaneous, huge swings in wins. When you get it, you're seeing just a little bit every time, and that naturally starts to grow bigger and bigger and bigger until all of a sudden one day you're like, whoa. That is a lot of growth And that's how compounding works. It starts little and it feels like it's taking forever. And then all of a sudden you get to this boiling point where it just starts to explode because you have enough of your investments in the game to really see some significant growth. Good investors most of the time are doing really boring things. And that means that they're continuously investing money. They're always buying into the market that they believe in, or the asset that they believe in. They're not taking heavy risk. doing something that seems zero sum, where they're either going to win it all or lose it all. They're doing little chunks of the time over and over again, and that leads to long-term growth. It is boring. It is very similar to talking to somebody about health and fitness. It is boring to eat consistently the same meals over and over again. But some of the fittest people I've ever met in my life eat the same thing for lunch seven days a week. They might change it once a week or once a month or whatever, but they consistently eat the same things that they know are healthy over and over again. They consistently do the same workout routines that they know are building muscle Or helping them build stamina through cardio over and over and over again. They're not wildly changing. They're not guessing. they're doing the same thing over and over again. And investing can be viewed the same way. It is boring when you're doing it right, but it will provide long-term rewards for you. On the flip side, when you think about kind of trading, gambling style trading, the time horizon is very short. Minutes, days, maybe weeks at most. It's all outcome driven. So it's all in the media of not what the company's doing, but is the company stock moving up or down? It's based typically on predictions. Where do you think it's gonna go? what do you think is going to happen for most people? It's Like gambling. It is. It can be emotionally intense. Wins are unpredictable and typically non repeatable. And so the other thing I like to say about this is if your success on whatever you're looking to do depends on being right. Right now, you're not investing, And so how do you protect yourself when there's so many things out there? You go to a site, and I'm kind of picking on Robinhood, but I understand they're in the business to make money, and this is one way they can do it. But how do you protect yourself to really understand like, what is this that I'm looking at? Because it's all kind of grouped together, and how do I know if I'm setting myself up for one of these situations or failures? And so anytime you're looking at any type of investment product, whatever, do you understand how do you lose as well as how you win? And then. does it fit my long-term plan? For most listeners that are listening to this, those that are working outta the paycheck to paycheck cycle, you should just straight up avoid this. You should be working on your emergency fund. If you don't have that built, you should be making sure all your high interest debt is gone. All revolving debt that you can get rid of, you're getting rid of, and you should make sure that your long-term investing habits are established if you choose to participate in some of these things. I would treat it like entertainment, very similar to what you should going to a casino, if you like to gamble and you are consistently good at making sure you don't over gamble, right? Or become addicted to it. We'll go with a set amount. I'm gonna go to the casino with a couple hundred dollars, and once I lose that, that's it. It's done, it's gone. And I expect to walk out of that building with $0 that I brought in there. Right? That's my expectation. It's a tiny percentage, and I don't ever confuse those types of strategies with a wealth plan or an investing plan. I know it's for entertainment, I know it's for fun, and I'm okay with losing that little bit of money that I'm allocating towards that fund. And so again, just to kind of recap it all for you, real investing, honestly, it's slow most of the time. It's super boring, but it's incredibly powerful. Long term prediction based trading options. predictive, yes or no. This is gonna happen. It's usually fast, it's usually emotional. And it's almost always really risky. If you're building a financial foundation, the fastest way forward isn't excitement. I'm sorry to disappoint you. It's just not, it's about consistency. It's about putting your stuff in something that has the opportunity and time to grow long term. So my call to action is, if this is something you're doing and you're putting in money and you haven't built up your emergency savings, you haven't, built your long-term significant strategy around actual investing. Like, stay away from this stuff. is building your wealth consistent and slow and kind of boring, or are you just looking for an adrenaline hit? If these are things that come up and you struggle with it, again, I point you to our community. Come join us at Net Wealth Nest in our private community. Or if you're ready for the next step, let's get you into some one-on-one coaching that we can really start to grow your wealth and get you out of this paycheck to paycheck cycle. Thanks for joining today. I hope this was helpful. My name's Jim. Bye, everybody.