There are two kinds of people who go to visit a casino. First, there are the people who actually believe they’re lucky. They think they’re going to win and, the more they play and the more money they spend, the greater they believe their odds to be. These kinds of people are likely to become addicts, ruin their financial lives, and alienate themselves from their friends and families.
Then there are the other, probably more common, kinds of people who visit casinos. These people are just going to the casino in order to have some fun. They know they probably won’t win much, but there is enough excitement involved in the prospect of winning to make gambling a fun game. At the end of the day, it’s just that–a game. Since these people understand how addictive gambling can become, they typically play a neat little trick on themselves. Rather than trusting themselves with their own money, they only take a small amount with them…and they leave the rest at home.
I don’t want to draw too much of a comparison between gambling and investing. Gambling can quickly become a way to ruin your financial life, while investing is a way to dramatically improve it. That being said, the two activities do–at least on some level–share a common purpose. Both gamblers and investors are putting money into something with the hopes of getting a return. You could even say that gambling is just really bad investing.
My point in drawing this comparison is to call attention to the behavior practiced by responsible gamblers. They know how easily they can get caught up in the moment and spend more money than they had intended. They know how exciting it can be when you’re on a roll, and how easy it is to forget that you can lose it all in an instant. Knowing this, they make a brilliant move–they only bring a small amount of money into the casino. In other words, they have the maturity to know that they can’t trust themselves with their own money.
There are many in the world of investing who want you to believe that you can trust yourself with your own money. Wirehouses and discount on-line brokerage firms play to your ego by insisting that you should be in control of your money and that you know how to invest it best. They do this because–like casino operators–they make more money as you keep speculating. The more trades you make, the richer they become. They don’t really believe that you can manage your own money; they know the opposite to be true, and they’re trying to take advantage of it.
I’m all for personal responsibility. I believe that we all should hold ourselves accountable for our own financial decision-making. At the same time, I’m all for the maturity of being honest with ourselves. We all need help, and we can’t manage our money entirely on our own. We’re too close to it, and we’re too blinded by our own hopes and dreams. The sooner we realize that, the closer we will be to realizing those hopes and making those dreams come true. If you need any help understanding how to best manage your investments, please reach out to us for a free consultation. Our dream is to make your dreams a reality.