The Power Of Knowing The Odds

One in a million sounds like terrible odds. And it is.

One in five-hundred sounds like decent odds. But it’s not.

Even once in a lifetime, which is approximately once in eighty years, isn’t good (and it could be zero for you and twice for someone else).

But odds like these don’t stop people from gambling. If you gamble, you’ll have some small and moderate sized wins along the way (those are plenty in a lifetime), but eventually you’ll give it all back, and then some.

Buying lottery tickets isn’t as bad as typical gambling, because you’re not going to lose as much money.

Or will you?

The odds of winning it big in the lottery are less than once in a lifetime (closer to one in a million). If you spend $5 per week on lottery tickets for 40 years, you will lose approximately $9,600 (minus your small wins).

But that’s not all. Because every dollar you spend on lottery tickets is a dollar you’re not investing. If instead of spending $5 per week on a one in a million chance of getting rich you put the money into an S&P 500 index fund (which has historically returned 7% per year, after inflation) you’d have over $50,000 after 40 years.

If you took it a step further and invested another $100 per week, you’d have over $1,000,000.