Jamie McIntyre - March 14, 2016

As spring carnival comes to a close it’s hard not to notice the fact that Australian betting companies seem to be attempting to reduce the risk associated with gambling by trying to mask a bet as an investment.

As a financial planner it’s baffling how this alignment to can be made when you consider the definitions of these terms in their true form:

• Gamble: ”To bet on an uncertain outcome, as of a contest. To take a risk in the hope of gaining an advantage or a benefit.”
• Invest: ”To commit money or capital in order to gain a financial return.”

Whilst investing in shares, or property for that matter, does come with a level of risk – investing should not be carelessly mistaken as a punt.

As an investor your objective is to make your money grow without taking any unnecessary risks. Money Smart says “Successful investment has very little to do with good luck. There are tried and tested principles you can follow which can vastly improve your ability to achieve your goals and avoid disaster.”

Whilst the likes of Tom Waterhouse or others that are heavily involved in the racing industry may try to tell you they have the knowledge, experience or gambling strategy that will guarantee results – the owners of ‘Verema’ would agree that horse racing and betting on a horse, any horse is not without it’s risk.

To say you are having a punt, a dabble or a flutter in the share market implies that you are carelessly putting money on, in racing terms - a ‘roughie’. A roughie is defined as “a horse at long odds, which is considered to have only a remote chance of winning a race.” Whilst ‘roughies’ or penny dreadful shares as they are known as to those involved in the market - can pay off well - the odds of them paying out or winning is very unlikely - the risk in gambling with these odds is often a far greater that than the potential returns.

While the Australian stock market does contain many penny dreadful shares or ‘roughies’ there are other strong, large and reliable companies that are worth considering and analysing in your investment decisions. These larger companies are known as Australian blue chips – they have a strong history of profitability and stability and most of them pay dividends – paying you a percentage of their profit each year for being a shareholder.

When investing in the stock market you should always consider your entry point, your time in the market and have a strategy for your profit margins. You should do your research and seek financial advice from an investment manager and have a well-researched and documented plan for what you want to achieve.

For great investment advice and to build your long-term investment plan contact the wealth professional – Jamie McIntrye at MAC Financial.