Your Financial Plan Shouldn’t Depend on Getting Lucky
It has never been easier to take a chance with your money.
You can bet on tonight’s football game from your phone. Prediction markets allow you to wager on everything from elections and economic data to entertainment and the weather. Investment platforms make it possible to buy the latest AI stock—or almost anything else—with a few taps.
Some of that can be fun. Some of it might even make you money.
But your financial plan shouldn’t depend on getting lucky.
There’s nothing inherently wrong with taking financial risk. In fact, investing requires it. The important distinction is understanding why you’re taking the risk, what you expect to receive in return, and whether your financial future depends on the outcome.
There is a significant difference between investing for your retirement and putting $100 on your favorite team. Problems arise when we stop recognizing the difference.
Gambling Is Entertainment, Not an Investment
Sports betting has exploded in popularity since a 2018 Supreme Court decision opened the door for states to legalize it. In 2025 alone, Americans wagered nearly $167 billion on sports.
For most people, placing an occasional bet can simply be entertainment—no different from spending money on a concert, a nice dinner, or a weekend in Las Vegas.
But it shouldn’t be confused with investing.
When you place a sports bet, you’re wagering money on a specific outcome. The odds are structured to give the sportsbook an advantage. Lose the bet and your money is gone. If you want another chance to win, you have to put more money on the line.
Investing works differently.
When you invest in shares of a company or a diversified investment fund, you own an asset. Its value will fluctuate—sometimes significantly—but you’re participating in businesses that can generate earnings, reinvest capital, pay dividends, and potentially grow over time.
That certainly doesn’t guarantee you’ll make money.
But it is fundamentally different from betting on Sunday’s game.
When Gambling Starts Looking Like Investing
The distinction has become less obvious with the emergence of prediction markets.
Platforms such as Kalshi and Polymarket allow people to buy contracts based on whether a future event will occur.
Will a candidate win an election? Will the economy enter a recession? Will a particular event happen on a television show?
Because these platforms use terms such as markets, contracts, prices, and trading—and display charts that look similar to brokerage platforms—the experience can feel a lot like investing.
But sophisticated packaging doesn’t necessarily make something an investment.
You’re still putting money behind an uncertain outcome with a defined payoff if you’re right and a loss if you’re wrong.
That doesn’t mean you shouldn’t participate. It simply means you should understand what you’re participating in.
Investing Can Become Gambling, Too
This distinction becomes even more important when we enter the stock market.
Simply buying a stock doesn’t necessarily mean you’re investing.
Suppose you hear that a little-known company is getting into artificial intelligence. The stock is soaring, everyone online is talking about it, and you buy shares because you don’t want to miss out.
Are you investing?
Or are you speculating?
Consider the recent story of Allbirds. The struggling shoe company sold its footwear business, announced a pivot toward AI infrastructure, and changed its name to Smartbird. Its shares subsequently soared nearly 600% in a single day—even though the company had no established AI products, services, or meaningful track record.
Eventually, the enthusiasm faded and the stock returned toward its pre-announcement levels.
We’ve seen versions of this story before.
During the dot-com boom, simply adding “.com” to a company’s name could attract investor attention. Today, “AI” can sometimes produce a similar response.
Artificial intelligence may indeed transform large portions of the global economy. But there is an important distinction:
Transformative technology doesn’t automatically make every company associated with it a good investment.
What Happens If You’re Wrong?
When people become excited about a speculative investment, the natural question is:
What if I’m right?
What if this is the next great technology company?
What if the stock goes up 500%?
What if I get in before everyone else?
Those are exciting questions.
But good financial planning requires another one:
What happens if I’m wrong?
Before putting money into a speculative investment, consider what the company actually does and how it makes money. Does it have a durable competitive advantage? Is there a legitimate connection between the company’s business and the technology generating all the excitement? And how much of the expected success is already reflected in the stock price?
Most importantly, consider what losing the money would mean to you.
That gets to the heart of managing risk.
There’s Room for a Little Fun
A good financial plan doesn’t require eliminating every speculative investment or financial indulgence.
Quite the opposite.
If your retirement is secure, your financial plan is on track, and your long-term investment portfolio is appropriately diversified, there’s nothing necessarily wrong with setting aside a small amount of money for something speculative.
Buy a few shares of the company you find fascinating. Put $20 on the Broncos. Make a prediction about an election.
Have some fun.
But know what that money is.
It’s fun money, not financial-plan money.
You shouldn’t need it to fund your retirement, pay for your children’s education, buy your next home, provide future income, or accomplish another important financial goal.
A simple test is this:
If you lose all of it, does anything about your financial life have to change?
If the answer is no, you may simply be spending some discretionary money on something you enjoy.
If losing it means delaying retirement, changing your lifestyle, or abandoning an important goal, you probably aren’t playing with fun money anymore.
The Risk in Your Portfolio Should Have a Purpose
A well-designed investment portfolio isn’t risk-free.
Nor should it be.
Investors accept uncertainty because taking appropriate investment risk has historically provided the opportunity for greater long-term returns.
But the risk in your portfolio should have a purpose.
If your financial plan shows that you need a certain long-term return to support your lifestyle and accomplish your goals, your portfolio should be designed around that objective.
The goal isn’t to take as much risk as possible.
And it isn’t necessarily to take as little risk as possible.
It’s to take the appropriate amount of risk necessary to give you a reasonable probability of achieving the life you want.
That is very different from speculation, where the attraction often comes from the possibility of an outsized short-term payoff.
You Shouldn’t Need a Home Run
One of the advantages of having accumulated meaningful wealth is that eventually the objective can begin to change.
Early in life, much of financial success comes from earning, saving, investing, and allowing time and compounding to work.
As you approach or enter retirement, protecting what you’ve built and turning those assets into the life you want can become increasingly important.
You don’t necessarily need to find the next NVIDIA.
You don’t need to double your money in a year.
You don’t need every investment to outperform the market.
And you certainly don’t need to wager your financial independence on finding the next great investment before everyone else does.
A good financial plan should be designed so you don’t need a home run.
That doesn’t mean avoiding growth or eliminating risk. It means taking enough risk to accomplish what matters to you without taking unnecessary risks simply because you can.
The Bottom Line
There will always be another opportunity promising a big payoff.
Today it might be sports betting, prediction markets, or an obscure AI stock. Tomorrow it will be something else.
You don’t have to avoid all of them.
You just have to understand the difference between the money you’re investing for your future and the money you’re willing to risk for fun.
One is part of your financial plan.
The other is entertainment.
Keeping those two buckets separate allows you to enjoy taking an occasional risk without putting the goals that really matter at risk.
Your financial future shouldn’t depend on getting lucky. It should depend on having a plan.
If you’d like to discuss whether the amount of risk you’re taking is appropriate for the life you want to live, we’d be happy to help—schedule a complimentary 15-minute call.
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This material was written in collaboration with artificial intelligence (ChatGPT) and derived from sources believed to be correct.
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