Reply #3: But you are gambling...

[naaman fletcher]

You are loaning your money to the bank with the hope that the bank will pay it back, with interest. The bank then loans that money out to people who want to buy cars, houses, etc. If those people don't pay the bank back, there is a chance that you won't get paid back.

EXCEPT: FDIC insures your CD account so that if the bank doesn't get paid back then the FDIC will.

If you buy a bond, you are doing the same thing almost. You are loaning your money to a company that will promise to pay it back in the future. EXCEPT with a corporate bond there is no FDIC. Depending on the corporation, this might be very risky.

Therefore, to get people to lend them money, corporations have to pay more interest than a bank does.

If you buy stock in a company you are hoping that the value of that company grows and you can sell it to someone else later at a higher price.

This is very risky, thus investors in the stock market expect and even greater return.

There is no riskless investment. If you consider taking risk to be gambling, then there is no investment that is not gambling.