Speculation vs Gambling

People often use speculation and investment interchangeably. But these two terms are totally different concept. Speculation refers to the short-term commitment of fund to make highest profit. Its intention is only to earn more profit in short period of time. The person involve in the speculation is known as speculator. Like investor the speculator does not analyze the risk and return while purchasing the real or financial assets. The speculator only focuses on the return. While making investment, investor carefully done analysis of all the available information, markets, and industry where as speculator make decision only with limited information.

Read also: Investment vs Gambling
Read also: Investment vs Speculation

For example, one of your friend told you that the value of a bitcoin is $4600 and raising day by day and will reach to $10000 in few months. If you buy some bitcoin only with this limited information, then it is said to be speculation. Here your decision is based on the limited information provided by your friend which may or may not true. And other point is that you didn't analyze the risk you just buy the bitcoin with the expectation of earning more profit in short time.

Gambling refers to the activity or practice of playing a game of chance for money or other stakes. For example, if you spend some money to buy a lottery tickets then it will be gambling. Here your chance of winning is uncertain. Gambling is for very short period of time. In gambling the profit is very high but the chance of winning is very low. The main objective of gambling is entertainment you. Making profit is secondary objective.

Some of the main differences between speculation and gambling are given in the table below:

Basis of difference	Speculation	Gambling
Meaning	Speculation, in the other hand, refers to the commitment of fund for the expectation of gaining higher profit in the short time.	Gambling refers to the practice of investing money in the game of chance for the objective of getting very high profit in very short time period.
Objective	The main objective of speculation is to earn more profit in short period of time.	The primary objective of gambling is entertainment. Earning profit is secondary objective.
Analysis of Risk and Return	In speculation, speculator does not analyze the risk and return while investing fund. He make decision by considering the rumor, inside information and market behaviour.	Gambles also does not analyze the risk and return.
Return	High return.	Very high return.
Risk	High risk due to the availability of limited information and non-analysis of risk and return.	Very high-risk due to the uncertainty of winning.
Time horizon	Speculator invests his fund for short time period especially for a few months.	Very Short Period.
Use of funds	Own or borrowed fund is used.	Own fund is used.