The problem is not people spending money on "worthless/ frivolous" things.

Investor protection are about Fraud protection. NOT, because it is good or bad to spend money on something.

If you spend 2 Million dollars on a car, you are getting exactly what you were sold. If you buy a lottery ticket, you are getting exactly the odds that were promised to you.

But investments are a different story. Someone is trying to promise you that your investment will go up. They are making claims that they cannot guarantee.

That is why investments are regulated.