I’ll be the first to admit, when lottery jackpot hits a hundred million dollars, I catch myself daydreaming about what it would be like to win and have all that money. I’d probably buy a giant house with a lot of land, get a bunch of nice cars, take my family on a nice vacation, you know, all that stuff you’d probably want to do.
But, somewhere in the middle of my daydream reality smacks me in the face and sends me back to the real world.
Winning the lotto isn’t ever going to happen for me, and, I hate to be the bearer of bad news, but it’s never going to happen for you either. Sorry to burst your bubble, but it’s the truth.
For example, let’s look at the odds of winning Powerball, one of the largest lotteries in the United States. According to the Powerball website, the chances of you hitting the jackpot and becoming an instant multi-millionaire are 1 in 146,107,962. Going by these statistics, if you played $20 per week, it would take you about 7,305,398 weeks – or 140,488 years – to hit the jackpot.
In looking at these odds, if you spend $20 per week on the lotto, you’re essentially wasting $1,040 per year. Even if you win a couple of bucks here and there, you’re still probably going to be in the hole over $1,000 each year.
What would happen if you kept extra $1,000 each year and used it wisely? You could pay down your debt debt, start and/or grow a retirement account, start a college fund, start a small business, take a vacation… I think you see where I’m going with this.
To further illustrate the point – what would happen if you took that $1,000 per year and invested it in a money market account that earned, on average, 4% annual interest? Here’s a table that shows how much money you’d have after 25 years:
| Year |
Balance |
| 5 | $ 5,634 |
| 10 | $ 12,487 |
| 15 | $ 20,825 |
| 20 | $ 30,970 |
| 25 | $ 43,313 |
Thanks to your will power and the power of compounding interest, after 25 years of saving as opposed to playing the lotto, you would have just over $43,000. If you had played $20 per week over those same 25 year, more than likely you would be out around $25,000.
That’s a swing of over $68,000 in your favor.
However, if for some reason you’ve decided that today is your lucky day and you absolutely feel like you have to play the lotto because the jackpot is $350 million – don’t worry, I’m in this boat – just play $1. It’s not as if you’re going to have much better odds by spending $20, $50 or even $100.
Just remember, the odds of winning the lotto are nearly 150 million to 1 - take the sure thing and keep your hard earned money in your pocket.
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