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As a business consultant who - as a favor - helps elderly people prepare their income tax forms, one of the more difficult tasks I have is to guide people away from putting their hard-earned savings into speculative or overly-risky investments, and into something that will generate a reasonably adequate and secure income. The issue usually boils down to the difference between "investment" and "speculation," speculation being akin to gambling. The best way to do this, I've found, is to define the concepts.

Investment consists of putting your resources - whether money, property, labor, talent, thought, or anything else that can be to productive use, "productive use" being something that generates a stream of quantifiable income. Investment is distinct from consumption, speculation, and gambling proper.

Consumption is (not to sound stupid), using up your resource(s), consuming them in carrying out your daily life directly. That is, food, clothing, and shelter (and intangibles such as recreation and rest), contribute directly to the quality of your life, and indirectly to the continued production of additional resources in the form of goods and services you produce by means of your labor or assets. Gambling is a form of consumption, for the activity is recreation, it does not produce anything other than entertainment.

Unfortunately, many people have been trained by our consumer society to think of all expenditures for consumption as "investment": you invest in a new suit to get a job, a house to build equity, a meal to have the strength to continue working, an education to enhance your job skills, and so on. As none of these expenditures generate an income in and of themselves, they are not "investment" but consumption ... unless someone is paying you to model the suit, live in the house, eat the meal, or go to school! (And if someone is, please tell me how I can get in on it!)

Yes, a house is frequently a family's single most valuable asset. It can often be sold for much more than was paid for it after a few decades or (if the real estate market heats up) a few months or years. That, however (unless the house is purchased to rent out, thereby generating a stream of income), is another category of expenditure, the "quasi-investment" activity we call speculation, and related closely to gambling, properly construed as a form of consumption for entertainment.

The difference between speculation and investment is that the value of an investment relies on the present value

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