Playing the lottery

[littleroc02us]

A player buying a $1 ticket has a 1 in 146,107,962 chance of matching the exact six numbers needed to win jackpot. You have a better chance of being hit by lightening. Odds of being killed by lightning: 1 in 2,320,000. I don't play the lottery and never will, but I was thinking about something.
What if you were a person that spent $50 a week on playing the powerball or buying lottery tickets. What if you invested that money into mutual funds for 30 years. If you started with a current principle of $50 for a term of 30 years and made 10% on return you would have made $471,000. Just think about that. If you were to double that and invest $5200 every year for 30 years @ 10% you would have close to 1 million. The lottery is a tax on the poor and middleclass.

[Slug]

Where else can you buy hope for only a dollar? Buying a ticket gives you permission to fantasize about the possibilities of winning it all. For many, those fantasies are well worth a dollar and keeps hope alive that you won’t have to work that 2nd job or the extra shifts at the factory to pay for the rent in the dilapidated apartment you feel lucky to have where tonight’s dinner is the store brand of instant mashed potatoes because that’s all there is and you’re just getting by to keep a roof over you and the kids.. So, how about we spend $1 on the lottery and then save the other $49 in the mutual fund?

[KTP]

A player buying a $1 ticket has a 1 in 146,107,962 chance of matching the exact six numbers needed to win jackpot. You have a better chance of being hit by lightening. Odds of being killed by lightning: 1 in 2,320,000. I don't play the lottery and never will, but I was thinking about something.
What if you were a person that spent $50 a week on playing the powerball or buying lottery tickets. What if you invested that money into mutual funds for 30 years. If you started with a current principle of $50 for a term of 30 years and made 10% on return you would have made $471,000. Just think about that. If you were to double that and invest $5200 every year for 30 years @ 10% you would have close to 1 million. The lottery is a tax on the poor and middleclass.

Well...actually, if you play $50 a week for 30 years, your overall odds of winning the jackpot drop down to 1 in about 1900 (this is not counting "re-investing" smaller wins over the years back into the ticket purchase). Thus it is MUCH more likely you will win the lottery than get hit by lightning, but still far less than your lifetime odds of dying in an auto accident (estimated at 1 in 158).

So I guess the lesson is don't drive an auto in a storm to buy your lottery ticket?

[littleroc02us]

Where else can you buy hope for only a dollar? Buying a ticket gives you permission to fantasize about the possibilities of winning it all. For many, those fantasies are well worth a dollar and keeps hope alive that you won’t have to work that 2nd job or the extra shifts at the factory to pay for the rent in the dilapidated apartment you feel lucky to have where tonight’s dinner is the store brand of instant mashed potatoes because that’s all there is and you’re just getting by to keep a roof over you and the kids.. So, how about we spend $1 on the lottery and then save the other $49 in the mutual fund?

Ha ha, that's a funny idea that makes sense.

[littleroc02us]

Well...actually, if you play $50 a week for 30 years, your overall odds of winning the jackpot drop down to 1 in about 1900 (this is not counting "re-investing" smaller wins over the years back into the ticket purchase). Thus it is MUCH more likely you will win the lottery than get hit by lightning, but still far less than your lifetime odds of dying in an auto accident (estimated at 1 in 158).

So I guess the lesson is don't drive an auto in a storm to buy your lottery ticket?

Let me know when you win the big one?

[KTP]

Let me know when you win the big one?

Hmmm, well I buy a lottery ticket maybe once a year, and then only when the jackpot has reached a point where it beats the odds (although I admit that at this level it would be more likely to have multiple winners and a split pot). What I mean is that if in a lottery the odds are 1:1000 and the jackpot has climbed to $1500 then I don't feel so bad about trying my luck. I consider it the ultra high risk/high return portion of my portfolio

[Slug]

I apply a similar methodology. I buy if the pot is over 100 million. If it's between 100 and 110, I buy 1. At the next $10m range I can buy 2. And so on.

[littleroc02us]

Has anyone here ever won the big one?

[littleroc02us]

Well...actually, if you play $50 a week for 30 years, your overall odds of winning the jackpot drop down to 1 in about 1900 (this is not counting "re-investing" smaller wins over the years back into the ticket purchase).
So I guess the lesson is don't drive an auto in a storm to buy your lottery ticket?

How is that possible. Each time you play your still competing against a very large number of people for the Powerball. Millions of people that is.

[bjl584]

A player buying a $1 ticket has a 1 in 146,107,962 chance of matching the exact six numbers needed to win jackpot. You have a better chance of being hit by lightening. Odds of being killed by lightning: 1 in 2,320,000. I don't play the lottery and never will, but I was thinking about something.
What if you were a person that spent $50 a week on playing the powerball or buying lottery tickets. What if you invested that money into mutual funds for 30 years. If you started with a current principle of $50 for a term of 30 years and made 10% on return you would have made $471,000. Just think about that. If you were to double that and invest $5200 every year for 30 years @ 10% you would have close to 1 million. The lottery is a tax on the poor and middleclass.

Well, anybody can chose to or not chose to buy a lottery ticket, so I wouldn't say it's a tax on the poor and the middleclass. It's more of a tax on the stupid.

I've seen your analogy with other items as well. Like if you skip the starbucks coffee in the morning and instead invest that money you would have hundreds of thousands over a 30 year period. Basically it's a lesson in living below your means and the power of compound interest. I rarely buy lottery tickets, but I know a few people that buy them all the time. I find it interesting that some of the same people that don't like the so called "rich" are out buying lottery tickets in hope of becoming "rich." Go figure......

[littleroc02us]

Well, anybody can chose to or not chose to buy a lottery ticket, so I wouldn't say it's a tax on the poor and the middleclass. It's more of a tax on the stupid.

I've seen your analogy with other items as well. Like if you skip the starbucks coffee in the morning and instead invest that money you would have hundreds of thousands over a 30 year period. Basically it's a lesson in living below your means and the power of compound interest. I rarely buy lottery tickets, but I know a few people that buy them all the time. I find it interesting that some of the same people that don't like the so called "rich" are out buying lottery tickets in hope of becoming "rich." Go figure......

Read the book "The Millionaire Next Door", I don't remember a chapter involving the rich getting rich by playing the lottery. That is why I stated it's a tax on the middle class and the poor. The Gov't gets a kickback from the proceeds via taxes.

[Slug]

It's actually more of an analysis of opportunity costs for your next dollar. Starbucks vs. Lottery vs. Mutual Fund purchase vs. Donation to charity vs. ETC... These are the choices that define you.

[KTP]

Read the book "The Millionaire Next Door", I don't remember a chapter involving the rich getting rich by playing the lottery. That is why I stated it's a tax on the middle class and the poor. The Gov't gets a kickback from the proceeds via taxes.

Well, you won't get *rich* by saving and investing either. You might get *well off*, but not rich. My definition of rich would be not having to worry about if I should use a 3% SWR or 4%SWR to make my portfolio last x years in retirement, but worrying rather if I should park the lambo at my California vacation home or the one in Virginia.

By and large the ways to get *rich* are inheritance, business owner (with some luck), or a VERY high paying occupation (athelete, movie star, ceo, etc.) The rest of us have to settle on being *well off*, unless we win the lottery. $50 a week is not going to get you $100 million in any type of scenario.

[Slug]

Well...actually, if you play $50 a week for 30 years, your overall odds of winning the jackpot drop down to 1 in about 1900 (this is not counting "re-investing" smaller wins over the years back into the ticket purchase). Thus it is MUCH more likely you will win the lottery than get hit by lightning, but still far less than your lifetime odds of dying in an auto accident (estimated at 1 in 158).

So I guess the lesson is don't drive an auto in a storm to buy your lottery ticket?

Um, I think the odds are actually worse than this. Every lottery drawing is a separate event so your odds with a $50 purchase each time are the same everytime (about 1 in 3 million). Your odds do not improve with repeated trials.

[bjl584]

Read the book "The Millionaire Next Door", I don't remember a chapter involving the rich getting rich by playing the lottery. That is why I stated it's a tax on the middle class and the poor. The Gov't gets a kickback from the proceeds via taxes.

I've read that book. There isn't a chaper on that. But there are stories in the news from time to time of people that have won large jackpots in the lottery and continue to play it and/or even win it again. So, some rich people do play it. Some even get richer by doing so. I would agree that MOST people that play the lottery are poor and middle class. Most wealthy people are too busy running companies, investing in the markets, and brokering deals of one kind or another to worry about playing the lottery. It's the poorer among us that dream of having money. If you already have it, then you dream of other things.