Investment or Gambling, what is your choice?

Have you seen snaking queues at the Singapore pools outlet in your neighborhood before? Did you observe the profiles of the people who queue there? Why do people still queue at the lottery outlets even though the chance of winning is so slim? Why are there so many lottery outlets available?

Surely, winners of grand prizes will jump for joy but what is the probability of betting rightly? People search for the magic numbers in a variety of ways. It gets creative sometimes but I shall not delve into beliefs and superstitions of what people do.

Let's focus on the thinking behind the action. Why do people still buy lottery even though they know its hard to win.

FOMO - You will likely know a neighbor, friend or colleague who participate in the Hong Bao draw. Nowadays, when the stakes go high with SGD 5m to 10m to be won, people also join in the fun. You may also know someone who made small wins before.

Fallacy - Many lottery buyers believe they get closer to winning when they experienced ''near misses''. They think that they will guess it right the next round. However, the truth is the odds are always the same in every draw, it is independent of the the previous draw. To yield a profit for the gambling industry, almost all commercial forms of gambling (e.g., lottery and casino table games) are designed to have negative mathematical expected returns for players over time (Arthur, Williams, & Delfabbro, 2016)

Escapism - If I strike it rich, I can retire immediately. Many people fantasize about how they are going to spend the winnings. This can be a form of relief from the pressures of the realities they live in. It becomes comforting to know that they ''tried'' to win. Gradually, it becomes a habit and forms part of the monthly expense budget.

Are there other alternatives to gain wealth?

An investment is “any asset into which funds can be placed with the expectation that it will generate positive income and/or preserve or increase its value” (Gitman et al., 2011, p. 3)

Investment on Companies, Stocks can give you certain yield and liquidity. Investment on Property, gives you good yield if you know how to select the property. A client bought his 1 bedroom property about 10 years ago and it has been rented out since day 1. It is currently rented for $5k month and the same tenant has renewed the tenancy every 2 years for 3 cycles already.

When buying company stocks and shares, investors will study the company annual report and decide if they want to buy it. Similarly when buying property, they will look at the background of the developers and various factors prior to buying.

In a similar fashion, punters will study the jockey, look at the form of the football players to ''best guess'' the odds of winning.

So is Gambling also an investment?

Investment horizon determines your choices

Investing in Stocks and Property takes a longer duration as compared to buying the lottery. If you are working and have a healthy income, then probably the longer haul and stability appeals to you more. On the other hand, if you are already way past the productive age or your income is unstable and lesser, then the limited options will likely drive you to higher risk alternatives. e.g. lottery. Hence, if you take a closer look at the snaking queues at the lottery outlets, they consists mainly of senior folks and foreign workers.

Both profiles have lesser timeframe and cannot afford to wait. They are willing to take the higher risks of losing because they do not have any other options. This is similar to crypto investors who entered the game at ''high price'' and also people who invests in Startups, hoping they strike 1 winner out of 100 they put money in.

If you have a chance to re live your life, would you make wiser choices?

Out of 10 people I asked, about 7 of them paused on the question and their faces eluded a hint of regret. They say they would like to do better in life, and have higher income, buy properties, start their business etc. Some say they regret working so hard for a company and neglecting their financial planning, health, family etc. Most will agree that the earlier they start their investment cycle, the better they would be today.

In conclusion, everyone wants better options.

The Economic cycle

If you are like me, you probably lived through a few economic cycles and witnessed how the rich became richer. Depending on the stage of every product and market, everything goes through a cycle. Some investors will enter the market when it hits a low based on the buy low, sell high theory.

Depending on how informed the individual is, they may enter the market when they deem the next up trend is coming after the trough. Generally, most investors look at the interest rates as an indicator. Smarter investors look at a few more factors and nowadays you see a lot of gurus promoting their formulas for success. I have a client who is a fund manager and the technical analysis he does is really complicated. It is supported by software and Ai to make fast buys and sells. He was previously a government scholar and has many years of experience in this field, serving many corporates. But with respect to buying property, he seeks my advise on what to buy and when to sell.

The economy is always changing, but when you are handling large value assets like property, you should not be worried if you know what you are doing. The true question is what kind of time horizon and mindset you embrace that determines the eventual success to achieve your end goal. If your property isn't churning good returns, then you may want to look at it and revisit the game plan.

There is a Japanese saying ''If you realize you boarded a wrong train, it is wiser to get off at the next stop."

Think about it as a cut loss strategy, rather then challenge the remaining lease and deal with maintaining the aging property.

The game of wealth accumulatio

As you would have guessed, wealth creation and preservation is a game all of us have to play. Just like any other games, there are rules to follow. You can only win if you play by the rules. You only need to focus on your growth and its about #winning together.

To help you widen the perspective, let's do an exercise.

/ Picture yourself at the recent street Xmas party in Orchard road.

/ Zoom further and you notice you become small with respect to the whole group of party goers in Orchard road.

/ Zoom a little further, you may see that not only Orchard road has a party, other locations are also having large crowds.

/ Zoom some more and you will notice that our neighboring countries also has parties and celebrations.

You get the point! An individual or family unit is just a small part of the whole economy. How you see yourself and the value you create impacts people around you based on your circle of influence. For most of us, it impacts our immediate family. Hence, creating options for yourself, playing by the rules not only benefits you, but your loved ones too.

In the larger context, it does not affect the economy at all.

Read here about the Anti thesis: https://www.dhirubhai.net/pulse/property-anti-thesis-dilemma-jordan-ng-6is5c/?trackingId=LTB0lnb7Sr2Wmk6XyR%2BnNw%3D%3D

The verdict

Gambling may be one of the worst ways to gain wealth because the house always wins. Addicts can approach the NCPG for help if needed.

Investing is a good way to gain wealth systematically and also to preserve wealth as you grow older. Getting professionals to help you along the way saves you much heartaches and pains. For property, the most important thing you need to do is to get a matching agent.

A matching agent is Someone who shares the same values and is competent to help you achieve your goals.

Read here on how to select agent: https://www.dhirubhai.net/pulse/12-types-agents-avoid-jordan-ng-j7ybc/?trackingId=6QKryQ1mTOa5DbbJVr1bmQ%3D%3D

Lastly, Please share this article and subscribe to the newsletter!

I am Jordan Ng, penning off now and going for my Lunch celebrations.

Have a great day ahead!

May you enjoy the holidays and come on stronger for 2025 and beyond! Hope to see you at the winners table soon!

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#realestateconsulting

#investmentvsgambling

#choices

#winningtogether