Would a million dollars change your life? Here's how to get it!
I imagine you've heard. There's a sizeable lottery jackpot on offer tomorrow night. Winning even a small fraction of the jackpot on offer could change your life.
You could buy your dream house.
Your dream car.
Go on your dream holiday.
Maybe you could change jobs to work on what you really want to do…
Yes – winning the lottery would fix everything. The slight hitch in that plan is actually winning the darn thing.
My 91 year old grandmother bought her ticket yesterday.
"Do you need a new house Grandma"? "Nope, I'm not moving"
"Do you want to go on a holiday Grandma" – "I'm too old for that!"
"Well what do you want"?
"I just want to win"…
Do you always buy a ticket Grandma?
"Most of the time, yes. You've got to be in it to win it".
Well actually Grandma, you don't. In fact, you'd be a lot better off out of it.
According to the Victorian Office of Liquor and Gaming Regulation website, you have a 1 in 8,145,060 chance of winning 1st division (playing 1 game).
Yep, the house always wins – and that's good news for gaming outfits like Tatts Group (ASX: TTS), Tabcorp (ASX: TAH), Echo Entertainment (ASX: EGP) and Crown (ASX: CWN)
My Grandma spent about $20 yesterday on her ticket for Tuesday's $100 million Oz Lotto superdraw. What if instead she had deposited her $20 into her bank? What if every week she deposited $20 into her account rather than spend it on the lottery, or scratchies and the like? What if she'd done that for 5 years, 10 years, 20 years? Heck, what about 40, 50 or 60 years – she is 91 after all?
Boring right? Where's the fun in that? The big payoff? I'm glad you asked. Here are the returns on $20 invested each week in a bank account paying 3.75% interest:
1 year = $1,058
5 years = $5,646
10 years = $12,271
20 years = $29,167
30 years = $52,430
40 years = $84,462
50 years = $128,566
With the miracle of compounding returns she would have taken her initial $20 per week habit and turned it into a substantial sum in the long term. Now, that's winning!
Of course, there's winning, and there's really winning!
If she'd invested her original $20 a week in the stock market over those same periods, her investment would be worth more — much more. Over the very long term, the share market has delivered an approximate return of 10%p.a.
Just check out these returns:
1 year = $1,095
5 years = $6,688
10 years = $17,458
20 years = $62, 741
30 years = $180, 192
40 years = $484,829
50 years = $1,274,979
Imagine if she could have saved $30 or $40 instead!
While Lotto has not been available in Australia for 50 years, the point is that my Gran could've made her very own jackpot, just by consistently investing and letting the miracle of compounding interest do its work.
A quick call today Grandma confirms my suspicion.
"Grandma – have you ever won anything on the lottery"?
"Oh darling, of course not! Although I have won $10 and sometimes $15 on scratchies occasionally".
What did you do with the winnings Grandma?
"Well I bought some more tickets love"
Sure, someone is going to win the lottery this week, but it's very unlikely it's going to be you!
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Motley Fool contributor Lynette Jackson doesn't own shares in any company mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
