By not playing it. True biz! 😛
Let’s say that you play the lottery for funsies. If you win, you want to win bigly. If you play the MegaMillions and PowerBall lotteries once a week, that’s $6 per week. This is roughly $25 a month.
The overall odds of winning any prize is roughly 1:24. In other words, for every $24 dollars played, you win two bucks. If you played $25 a month for the next 25 years, you’ll spend $7,500, and win back roughly $625 dollars! Then again, if you win the million dollar jackpot, it’ll be worth it.
I’d rather keep as much as $7,500 dollars as possible. Since it is ‘fun’ money, how can I speculate and still keep much of it as possible? I could play card games at the local deaf club or deaf poker tournaments. At least I’ll be entertained while I slowly flush my money away…
Small Cap Stock Speculation
Or I could speculate on small cap stocks. 😮 Specifically, the small cap index maintained by Vanguard. (VSMAX) Small caps have huge volatility; the price can fluctuate in a wide range, from huge losses to huge gains.
Starting with an initial $1,000 investment* with VSMAX, and just contributing $25 dollars a month, I could have roughly $7,125 dollars by ten years, $12,725 by 15 years, $21,300 by 20 years, and finally, $33,560 by 25 years! Even on the 10th percentile, by the end of 25 years, the portfolio will have $13,035 dollars**! (Source: Monte Carlo Simulation)
Which one would you like to have? $625 dollars? $7,500 unspent funds? or $33,560 invested funds? Why, I’ll take option C and blow the cash on a nice cruise with a balcony cabin, and still have money left over to play poker in the cruise ship’s casino. Ok, I’ll play the lottery once in a blue moon for funsies.
Final thoughts…
This has been a mental exercise. No benjamins were harmed in making this post. Investing in the stock market is a risky endeavor, and this blog does not give financial advice. I just wanted to share some thoughts regarding the lottery.
Featured Image Credit L. Brewster – Flickr* VSMAX as managed by Vanguard actually requires a minimum of $3,000 investment.
** The numbers may vary slightly by the time you click on the Monte Carlo Simulation link.
