What Suits Your Personality? – Gambling or Investing

For every serious investor, one of the most important parts of their investment is the investment returns known as Dividends. When a company earns a profit, they have three options available to them. These options include: reinvest it in the business, pay the profit out to their shareholders, or invest in share repurchases and debt reduction. When a portion of the profit is paid to the shareholders, it is referred to as a dividend.

There are a number of options open for investors choosing this sector, from agricultural investment funds, ETFs, direct investment into agribusiness companies, or trading soft-commodities such as wheat. My problem here lies in the fact that these investment strategies do not tick all of our boxes. Funds incur management fees, and over the lifetime of a mutual fund investors lose 80% of their gain to management fees, commodities can be volatile in the short term, and investing into agribusiness companies does provide any level of non-correlation.

There are many benefits to including dividend paying stocks in a stock portfolio. For instance, companies who pay out dividends are usually more financially stable. Companies that are able to successfully manage their cash flow will normally maintain and increase their dividend payouts long term. Dividends also help reduce volatility as dividends help decrease the potential decline of a company’s stock price. As well, dividends are advantageous for prudent investors because they provide income and the tax charges on dividends are relatively favorable.

Risk Chases Quick Profit Avenues Indeed, risk is involved in both ways that aim at multiplying ones capital in an ideally short period. But the investment broker seems to be left with more options than the gambler. Investments on the stock markets can be well informed.

The remaining profits are then invested back into the company for future growth. Many experts believe that the recent near collapse of Wall Street may not have occurred if banks had just decreased their dividend payout ratios. Another good stock pick is one where the company pays a dividend yield of between 3% and 6%. Also, the company should have a history of generating profits and increasing its dividends.

There are opportunities for the smaller investor to take part in large farmland investment transactions, either pooling capital with other investors in order to purchase better and larger land parcels, and other very interesting structured vehicles allowing the small investor to purchase a small piece of a much larger, commercially managed farm, with the farmer shouldering the general agricultural risk and paying the land owning investor a fixed annual income.

Attempts to regain lost amounts by investing even more money are mostly doomed to fail. Furthermore, gambling is highly addictive as the players always hope to win in the next round. Thus it is hard to keep track on how much you are investing.

Conclusion On the base of well-informed choice making and a patient, deliberate strategy, the stock market investor can succeed to increase risks to a minimum. Although a gambler, after having been fortunate one, might take the money, gambling addictions have shown that the risk stays to be uncontrollable. In conclusion, the stock investor as well as the gambler should be aware of the possibility to loose and the necessity to back off early enough.

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