The Lottery Is Not An Investment

Lottery Picture

As I write this, there are two major lottery jackpots that are each well into nine figures. It’s very tempting to buy a ticket and get rich overnight, but don’t. You’re more likely to get struck by lighting several times than you are to win the lottery.

There is nothing wrong with buying a lottery ticket every once in a while. But there is a fine line between once in a while and making it a habit. Just like there is a fine line between having an occasional glass of wine and consuming an entire bottle every night. The average American spends $540 a year on lottery tickets. That’s $45 a month. Sadly, people who make under $10,000 a year spend an average of $597 a year ($49.75 a month) on the lottery. That’s 6% of their income!

 A recent survey found that 55% of all Americans who make less than $45,000 year said the only way they would ever become a millionaire is if they won the lottery. If these people would take that $45 a month and invest it in a decent mutual fund averaging 11% interest a year (the stock market average for over 80 years) from age 18-65, they would have just under $730,000. If those spending $597 a year invested that money instead, they would have almost $807,000.

Now you might be saying, “yeah, but the lottery jackpot is often a few hundred million dollars.” True, but there is a difference. With the lottery the odds of winning are usually around 1 in 180,000,000. If you invest it instead, you’re almost guaranteed to be rich. Please stop thinking that investing is only for the rich. People don’t invest because they’re rich, people are rich because they invest. Think about that the next time you scratch off another losing ticket.

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