FIRE Finance: Lottery Tickets - Our route to Wealth?

Edit Post Wednesday, December 19, 2012

Dec 19, 2012: Today we went to a Walgreen's store to return some gifts that we felt were not going to be useful for this Christmas. While waiting in the line for returns we overheard a conversation between two middle aged ladies standing right ahead of us.

One of the them was sharing an inspiring story about how she had saved about $40 on her medication by clipping coupons and shopping for some generic medicines. In fact, she did have a couple of $20 bills in her hand. We were very pleased to see people actually practicing frugality in real life! But perhaps we had reached our conclusion too soon.

Since the returns line was growing longer, another counter was opened to speed up the returns. The middle aged ladies were the first ones at this new counter with us right behind them. They returned some stuff and then the coupon clipper lady spent her entire booty of savings ($40) on a bunch of lottery tickets! We could not believe our eyes.

Most of us know that chances of winning money via lottery tickets are extremely slim. Akin to gambling at casinos, the house will eventually win in the long run. Our friend Neville (from NevBlog) has conducted a fun filled lottery experiment to prove the same.

In the end we left the store shaking our heads at the whimsical ways in which people try to get rich quickly. Lottery tickets can never be a trusted and proven way to wealth. What are your thoughts about becoming a millionaire via the lottery ticket route?

Image Source(s): iStockPhoto

Anonymous said...

Might as well put your money in a box in your front yard and hope it magically turns into a million. I'd rather spend the money on poker if I'm going to play the odds.

Everyone dreams of the instant get rich dream where they will be financially stable forever and can spend money on whatever they want. The reality is that's never happening and it should be left as a dream. Be smart about money and have a plan.

FIRE Finance said...

@Her Every Cent Counts: We'd play Black Jack since that has the highest chances of winning :)).

@Craig: Bingo you are right on target! You have said it so well.

Every time you think someone has personal finance figured out, you hear the punch line, as in this story of purchased lottery tickets. It makes you wonder what kind of risks this lady is taking with her investments.

Paula Wethington said...

I do know people who enjoy playing $1 to $5 a week on the lottery.

But if someone had to work that hard to save $40 ... I wonder why all of it is going to lottery tickets.

A little lottery playing in moderation is understandable, of course: most of us are very unlikely to ever get spend our time on flagrantly luxurious vacations -- but buying a lottery ticket means paying for a few minutes during which that is a distinct, albeit remote, possibility.

While fun to speculate on how I would spend the millions, it won't happen as I do not play!

My experience in investing over the last 18 years has resulted in losses. I should have invested in the lottery than the stock market.

@Mr. GoTo - So True :)
@Monroe, @TaxRascal, @SimplyForties:
Thanks for your feedback
@Anonymous:
Well, at present the stock market as tanked. But there are numerous stories about how people have made a fortune from the stock market through disciplined investing via index funds and diversification!

I've seen this too. In fact one of my uncles regularly spends $40 a week on the lottery and I do wonder why.....

I guess there are some lottery winners who do keep their money but we hear too often of people who get lucky and have lost it all in only a few years. If people can't handle the money that they have now why do they think they can handle so much more of it?

@Anonymous
Obviously I don't know your circumstances but sometimes more education can seriously help when it comes to the stock market. I lost some money in it some years ago and I went to courses to gain further financial education to know what I was doing (I didn't know about stop losses or options back then). There is lots of free info online that can help create new strategies.

When starting an investment always think about risk / probability / reward. What's your exit plan? Decide upfront when you will leave an investment - even with a loss. It's much easier to make this decision upfront rather than stressed if something has gone wrong!

Regards,
Karen Leslie

@Karen
Thanks for your detailed feedback :)

Jay @ effumoney said...

Surprisingly 21% of Americans think the lottery is a plan to build wealth. That is so sad, in my opinion that entire 21% will always be living pay check to pay check. Lottery is sometimes referred to as "stupid tax" meaning it is a form of tax collection from stupid people. The odds of winning are substantially worse than just about every other way of making money.

That being said there are methodologies to increase your chances of winning, however they require lots of computing power, in depth knowledge of statistics and a lot of working capital to invest, if you have those 3 things you will not worry about the lotto as you can apply them to much more lucrative returns like the stock market or real estate or commodities etc...

Lottery Tickets - Our route to Wealth?

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