Investing and gambling can both be fun. But they are not the same.

According to the CFA Institute, 61% of Gen Z investors aged 18 to 25 gamble online or in-person.¹ As a father of two young adults, ages 18 and 21, I think a lot about making sure that the next generation understands the difference between investing and gambling. To be clear, I’m okay if my children gamble small amounts, but I need them to invest as well, and critically important, I need them to understand the difference. 

I share this because recently my kids and their friends were betting on a game, and when I asked them if they understood the difference between investing and gambling it wasn’t clear to me that they did. This lack of understanding concerns me and could lead to very bad financial outcomes for them and more broadly, their generation.

We can’t let that happen.

What investing and gambling have in common is that they both involve risk, and both have potential for gain or loss. But they are not the same—gambling is a game of chance, typically involving short-term bets on binary outcomes. Investing, in contrast, is often a longer-term strategy based on research and data aligned with risk tolerance and financial goals with the aim of acquiring a diversified set of assets that have the potential to appreciate in value and ultimately build wealth for the investor over time. 

And to be clear, they have very different expected returns. Studies published by the CFA Institute showed that:

1. Over time, gambling always has a negative expected return. In casinos, the built-in mathematical “house edge” reliably leads to a transfer of money from players to the casino. In the long run, the house always wins.¹
2. Investing, on the other hand, is the allocation of capital to a business or asset with the expectation that it will generate income or appreciate in value. Over the past century, investments in stocks and bonds have reliably yielded positive returns.² However, keep in mind that the past performance of any investment is not a guarantee of future returns or profits. In the long run, it is possible for both investors and the issuers of securities to earn a positive return.

Analysis from the Schwab Center for Financial Research³ shows that the chances of achieving a positive return by investing increases with time. Take any single month between 1928 and August 2025 and the S&P 500 was profitable about 62% of the time. If you extend that time horizon to a year, the probability for a positive return improves to 75%. Over five years it rises to 89%. Over ten years it’s 95%. And a 20-year investment in the S&P 500 has historically yielded a positive return 100% of the time. You simply can’t say that about gambling.

It’s important to acknowledge that recent trends in our industry are making it even harder to distinguish between investing and gambling. There’s much discussion right now about the line between traditional gambling and the emergence of prediction markets where people can trade contracts that pay based on the outcomes of future events. There are aspects of prediction markets that could be a good opportunity for investors. For example, certain financial event contracts might serve as hedging instruments given that they can have a direct impact on someone’s investment portfolio. The lines get much more blurred when it comes to something like sports and entertainment contracts that are not correlated to someone’s investments. I don’t believe real, serious investing should happen in a casino-like environment—that could be a very dangerous trend. It’s critical that people understand how these products work, the inherent risks involved, and that they are offered in a clear and responsible way that does not further blur the lines between investing and gambling.  

At a time when we are surrounded by gamification and instant gratification in so many areas of our lives, we also need to acknowledge that the thrill of gambling can be addictive, and in turn destructive. As much as I’m a passionate investor, I’m not sure long-term investing has that same addictive power, and even if it did, history has shown that it likely would not be destructive. If gambling becomes a more mainstream activity, and as more and more companies conflate investing and gambling into a single experience, we owe it to our kids, and younger investors more broadly, to make sure they understand the differences. 

As a father and as head of Retail Investing at Schwab, this is a priority for me. I hope it is for you too.