The Emotional Money Trap: Why We Love to Gamble But Hate Buying Insurance

Don’t you love the thrill of taking a risk and making a bet, knowing that if luck is on your side, the results could be life-changing? 


Of course you do, and casinos know it so they create have seductive tactics to lure you into their establishments so you will put your money at risk for the chance to beat the odds and change your life…


It doesn’t have to be the dazzling lights and glitz of  a Vegas casino that will seduce your imagination either. It could be a simple $2 Powerball ticket when the jackpot skyrockets to $1 billion that will have you dreaming of a new possible future. “You have to be in it to win it…now, if you can JUST WIN.


Or perhaps it’s a more responsible ‘gamble’, like speculating on a long-shot stock that could be the next Monster Energy Drink or Amazon

buying insurance is worse than gambling in a casino
We love to think of ourselves profiting by beating the odds...sometimes.


So, if you are like most people, your tendency will inherently sway toward taking risks where you can use your money to try and create more money with it. You likely believe the idea of challenging the odds, beating them to come out smelling like roses how winners are made, right?


Of course deep down, you kinda realize the odds will play out. If you take big risks with even a little money, you know you might lose it…


Of course you don’t take these kinds of risk because of what is likely to happen, you did it because of WHAT IS POSSIBLE!


On the other hand, buying insurance is kind of a risky bet with your money too. If you buy a policy, your premium is your wager. If the covered event happens, then you (or your beneficiaries) will receive a pay-out – JACKPOT! Right…?


Of course, the BIG DIFFERENCE with risking your money to buy insurance vs. using your money to gamble or invest with is that the wager you make by buying insurance ISN’T one you hope you hope to hit a “jackpot” with. That’s because if you did, it means something awful happened: It could be  a major medical issue, a permanent disability, or even death.


Nobody wants to think about these things happening, so people avoid them. After all, the likelihood of one of these awful events happening to you are low so the likelihood of getting any value from buying a policy low too…


Who wants to spend their money so the insurance companies can make more, right?

But herein lies the paradox: while the odds may be in your favor that nothing will bad will happen giving you access to millions of dollars in claims, the potential consequences of not having insurance IF  you do need it will be devastating.


The payout from insurance isn’t a “nice to have” like a big payout from a big bet, IT IS LIFE SAVING…

In this article, I’m going to introduce you to a new way to think about gambling, investing and insurance.


You can have everything you want and more when you understand how to exploit the rules of the financial game to favor you.

The Profit Engines: Casinos and Insurance Companies

When we think about the most profitable industries in the world of risk, two giants stand out: the gaming and insurance industries. They are ‘money making machines’ who are both are masters at rigging the odds to ensure they make money. The irony is these two industries lose money all of the time too! On any given bet or policy, they may pay out more than they collected on that individual. The key to their success over time has to do with two factors. 1) “The Law of Large Numbers” which basically states when considering multiple samples (bets/policies) the averages work out, and 2) They never put at risk so much money on any one bet/policy that if they lose money (the gambler wins or the policy owner has a maximum claim) they will go broke…


It is a simple yet fascinating model that most understand, but few try to duplicate in their lives. 

Instead, they try to create their own wealth by following the examples of those who beat the odds which is unfortunately why so many people struggle to achieve the results they want.


Lets explore these two businesses to understand how we might be able to model them to create and maintain exceptional wealth for ourselves instead of attempting to beat the odds to accomplish the same. 


How the House Always Wins: The Mechanics of Profit in Gambling and Insurance


Casinos are synonymous with the thrill of chance, but behind the glitz and glamour lies a meticulously rigged system. Every game in a casino is designed with a built-in advantage for the house, known as the “house edge.” This edge ensures that over time, the casino will always come out on top.

But the rigging doesn’t stop there. Casinos set limits on how much can be bet on a single play, ensuring that even if a player beats the odds, the potential loss for the casino is capped. This is a critical part of their risk management strategy – they may lose individual plays, but they’re engineered to win the game which is all that matters.


And what about the high rollers who do win big? It is all part of the strategy to seduce more gamblers into their facility. Who can resist the possibility of proving their exceptionalism by beating the odds and putting their own money at risk. Don’t worry about the big payouts they have to give out occasionally either…


First of all, those losses are never so much that the casino has to stop playing. As a matter of fact, they  have a seductive strategy to keep the big winners playing. They provide complimentary rooms, meals, and entertainment – all designed to keep the winner betting. Because they know (EVERYONE KNOWS…) the longer a gambler plays, the more likely it is that the house’s edge will prevail, and the winnings will flow ALL back to the casino.


Oh, if you could only own your own casino and rig the game to favor you it would be like a money printing machine, right….?


The Art of Selling Security: The Business Model of Insurance


Insurance companies, on the other hand, sell the promise of security. But don’t be fooled – they’re just as calculated as casinos when it comes to rigging the game in their favor. Through the process of underwriting, insurers carefully assess the risk of each policyholder, setting premiums that ensure they collect more than they pay out.


Just like casinos, insurance companies have their own version of a bet limit: they never take on a risk that could potentially bankrupt them. If a potential claim is too large, they’ll either refuse offering coverage or spread the risk by purchasing something called reinsurance. This is insurance for insurance companies, a safety net that protects them from catastrophic losses.


But here’s the kicker: insurers often buy reinsurance for events that are incredibly unlikely or may have never happened before BUT COULD. They buy the reinsurance because they are smart enough to know if that event does happen, it has the potential to financially devastate the company and shut them down.


It’s a paradox I want you to understand and take note of – Insurance companies are in the business of assuming financial risks, yet they also insure themselves against some of the very perils they’re protecting you and all of their other policy holders from.


For example, my company Decision Tree Financial is in Florida. Florida tends to get these wind storms called hurricanes now and again. Insurance companies have a pretty good idea of the damage these storms are going to cause based on history, BUT…


They also know ‘the next one’ could be bigger than anything that happened before in the history of Florida and with all of the new people living in the state, the economics of that unprecedented storm could cause more claims than they can financially handle. Imagine if conditions we right to have a Category 5 storm sit off of the cost and push storm surge deep into the west coast of Florida destroying 50% of the cars in the state. If that happened, most companies would fail if they don’t have the financial support of another larger insurance company who is collecting premiums for other unprecedented risks like Earthquakes, Volcanos, Floods or Tornados in all the other parts of the world.



(By the way, reinsurance is one of the reasons insurance is so expensive in Florida. They require more money to assume these large risks so they can both ensure they can cover them for their policy holders and make more their own profits. If they don’t believe they can do this, THEY DON’T EVEN TRY TO PLAY THE GAME by now offering coverage in the state. A lot of insurance companies are doing just that, moving out of high risk areas like Florida and California where they can’t predict their loses or rig the game to their liking.)  

The Seduction of the Investment World

When it comes to the investment world, Wall Street is the ultimate seducer. With slick marketing and persuasive sales pitches, they paint a picture of a path paved with gold for those willing to ‘invest.’ They use graphs of past performance to capture the imagination of wanna be investors, showing them what they could have made had they only started investing years earlier. It’s a powerful narrative, but it often glosses over the crucial element of risk. As a matter of fact, many choose their investment portfolios based on past performance of an investment method or fund without fully understanding the potential dangers or why it increased in the past.

Is it duplicatable or are investors keeping their fingers crossed it works out again?


The Allure of the Stock Market: A Casino in Disguise?


Imagine if you had invested $10,000 in Apple on September 16, 1997. This is the day Steve Jobs returned to the company to be their CEO. By 2023, that $10,000 investment would have grown to an astonishing sum of almost $12,000,000, all without you having to lift a finger. The market would have done 100% of the work for you.  Wall Street’s marketing machine makes sure every investor knows about these success stories, influencing behavior and reinforcing the dream of effortless wealth. Like Glenn Frey said in the song ‘Smugglers Blues’ – “It’s the lure of easy money it has a very strong appeal…”

Countless investors try to find the next APPLE and put their money at risk doing so.


But let’s not forget who’s running the show. Wall Street is the casino in this scenario, making money whether the stock purchaser wins or loses, thanks to upfront fees and commissions. The investor, on the other hand, is the gambler. Some win big, but most lose using this method. As long as people play, Wall Street wins.


The Dangers of Going All-In: Diversification is not Enough


Most responsible investors recognize the risks of speculating on the next Apple Computer, knowing there’s a high likelihood they could lose everything. After years of working with people and helping them make smart decisions with their money, almost all of them lost so much when they were younger trying to speculate, they want to find a less risky way of making money because they are att the age where they can no longer make a mistake. They believe every dollar matters which is the beginning of ‘thinking like the house.’


Most investors adopt a more responsible approach through the process of diversification. A diversified portfolio spreads investments across various assets to reduce risk; Established Blue Chip stocks, bonds, real-estate, commodities, and private equity. Think of diversification kind of like a fruit salad – if one fruit goes bad, you still have others to enjoy. The idea is that when some investments are down, others might be up, balancing out the overall risk.


But diversification has its limits. It can’t protect against something called systemic risk which is the risk of a complete system failure. We don’t have to look to far back into history to see the consequences of not addressing systemic risk. All we need to do is look at the stock market crashes during ‘The Great Recession” and the crash that happened during the onset of Covid in 2020 to see what this can do.


When crashes due to systemic risk are happening, Wall Street’s message is always “don’t sell; the market always bounces back,” even though the disclaimers investors sign state that “past performance is no guarantee of future results.” This “all-in” philosophy is starkly different from the strategies used by casinos or insurance companies to make money while managing risk and to me, this is one of the main reasons people aren’t confident about their future!


When you step back and look at this, you can see the mode of operation most people adapt are that of the speculator. They hope everything works out in their favor while praying nothing happens that could destroy what they have worked so hard to create.


The investment industry teaches investors they need to be “all in, all of the time” and use cherry picked statistics to make their case. 


What if I told you you don’t have to be “all in, all of the time” or that you don’t have to use a diversified portfolio to build and protect your wealth. Yes, it is much easier than you may believe but you won’t here about it because there is no money for Wall Street to make when you use these methods…

The New Way to Think About Building and Protecting Wealth Through Investing

Yes, people generally love the idea of putting their money at risk so it can make money and avoid taking risk management measures, like buying insurance, because they believe you have to chose one or the other. They believe, if you buy insurance, you will have less money to invest; if you invest, you have to just hope it all works out. This isn’t true! The fact of the matter is your investment strategy should allow you to take as much risk as possible and manage your risk at the same time; just like insurance companies and casinos operate.

Imagine being able to generate 30-40% higher returns over time, allowing you to build more wealth or generate more retirement income than you are today all while having the risk management solutions in place to protect you from the financial barbarians that are so ever present in our world today?

I know this sounds too good to be true, but it isn’t. It is just kept a secret to you because there are powerful industries that need you to believe their methods are best so they can maximize the profits they can make off of you.

I create a 20 minute presentation to explain how this is possible. I made it in a way so that even if you don’t consider yourself a financially savvy person, you will still be able to understand how to increase your standard of living while protecting yourself financially. 

You can learn more about the presentation by clicking here. I call it “Invest Like The House” because it explains how you can easily model casinos and insurance companies to duplicate their investment success and not leave yourself open to unlimited financial losses for any reason (i.e. – insure yourself against risks you can’t avoid but could wipe you out financially if they occur!)

By the way, if you are hesitant to learn more, I understand. I know it is hard to confront the realization that the way you have always thought may have not been the best way. This can cause remorse. However, today is a new day and you do have the rest of your life. The worst thing that could happen today is you don’t find out what I am talking about in my presentation now and discover the strategy could have changed your life when it is too late. Now is the best time to make a change when you know it is the right thing to do. 

If you find out about my strategy and it isn’t right for you, (which it might not!) you can at least look yourself in the mirror and say “I know” and just feel regret over the 20 or so minutes of your time you lost finding out…

All kidding aside, I believe you will find what I have prepared insightful and entertaining so, if you do have 20 minutes, take a look by clicking here and I look forward to sharing what I have discovered.

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