How to Beat the Lottery

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Now that the most recent lottery craziness has faded from memory, it seems like a good time to review how few people actually won and what it cost us.

When the Mega Millions hit $1.6 billion, I was behind an elderly person in line at a 7-Eleven who spent $50 on tickets.

To say she didn’t appear to be able to afford that much money for tickets is an understatement. She was obviously well above retirement age, she didn’t appear to be doing too well and she drove home the reality of the statistics I have seen about lottery players and winners.

Twenty-one percent of adult Americans buy a ticket each week. They spend more than $70 billion per year on a 1 in 300 million chance of winning the big one.

Those odds are just stupid! And the Mega Millions recently rewrote the rules for the drawing to make it more difficult to win.

The annual interest alone on that kind of money is more than $4 billion. This is the best thing we can think of to do with our money?

The American Red Cross could be funded for two years with $5.5 billion. That’s worthwhile.

The chances of just breaking even in any of the lottery games are about 37 to 1. If you’re willing to play those odds, you should be selling options.

You decide: Do you want to take your chances on the lottery? Or profit from a defined options strategy? I’m not an options guy. I like the 94 to 99 out of 100 odds that my bonds offer.

But let’s suppose I’m wrong and you hit the big one. Here’s what you can look forward to if you win the lottery.

Here’s what you can look forward to if you win the lottery.

  1. Seventy percent of big winners end up in bankruptcy.
  2. Thirty-seven percent report they are less happy than before they won.
  3. More friends and relatives than you knew you had will have their hands out.
  4. Forty-four percent report that all the money is gone in five years.

If you typically spend $2 per week on tickets, save it and go out to dinner with your beloved every New Year’s. That $104 will buy a lot of good feelings from “Miss Special.”

There are so many better things you can do with your money besides giving it away to your state. Think it through. I’m sure you’ll see my rationale.

It would be fun to hit the big one, but it would be even better to see all that cash in your savings account. It isn’t $1.6 billion, but it is yours.

Good investing,

Steve

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