Gambling with your retirement

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I’m not much of a gambler.

I never play the lottery. I’ve never met a bookie. And I can’t stand Las Vegas.

The truth is I just don’t like losing money.

But I can see the the allure of gambling. As an example, as a college student I went to the Del Mar racetrack in San Diego. I knew nothing about thoroughbreds, handicapping, or racing culture.

My first impression was of a bunch of massive beasts charging around a dirt track with Lilliputians in brightly colored parachute pants perched upon them.

Then I bet two dollars on a horse named Piccadilly Pickle to show.

Gradually, the majestic beasts began to show tremendous athletic prowess and heart. Brave jockeys steered their steeds onward towards glory.

It was a metaphor for life. And it was glorious.

I had a stake in the game. I was invested.

Which is to say we all like to win and having our money on the line really gives us something to root for.

One of the most common critiques of investing is that it’s “just gambling.”

And in a way it is. When you put your life savings on the line you’re definitely interested in how it all turns out.

I used to scoff at the business pages in the Times. Who would read that stuff? Who cares what the profits are for company A? Who cares what stockholders think about the CEO of company C?

Now I check the stock market app on my iPhone about 10 times a day. It’s fun. Because I’m invested.

When the stock market goes up I feel happy. When the stock market goes down I feel concerned. It’s not unlike watching Piccadilly Pickle Complete in an ever-changing and always interesting Kentucky Derby.

Actually more watching like a really tight extra innings SF Giants playoff game. (Let’s be honest horseracing can’t compete with that – bets or no bets.)

But there’s a very important way in which investing is not like gambling at all.

Or more to the point it’s exactly like gambling.

You see the savvy investor who plays by some very simple rules (which I’ll attempt to cover in the near future,) is not the polyester-double-knit-sporting octogenarian standing by a slot machine for hours pouring in his Social Security check quarter by quarter.

The savvy investor is the slot machine. Or the bookie. Or the race track owner.


This could be you.

You see when you choose to employ a passively managed, low-cost, well diversified investment strategy. And when you have the intestinal fortitude to stick with it through thick and thin. The odds are tilted in your favor.

Just as the global economy grows over time, so will your money. Minus whatever fees and taxes your investments lose along the way. (Foreshadowing alert: fees matter.)

And over time the money that your money made will make more money.

And it will be fruitful and multiply.

It’s almost biblical, but more interesting.

After all….you’re invested.

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