Hey, you.

I have some news for you. You’re not going to win the lottery (Powerball and Mega Millions) tonight. I’m sorry to be the one to break it to you.

Yes, it’s fun to fantasize about all the things you could do with that kind of insane windfall. But it’s not going to happen. You’re more likely to win an Academy Award or be killed by a vending machine.

I have a better idea of what you could do with that two bucks you’ll waste on a ticket (Bear with me, I am not necessarily great at math. But I am great at saving.)

Say you spend $2 every week on the lottery a year, for 30 years. That’s $104/year for 30 years. (Don’t even get me started on how awful the lottery is and how it’s essentially a tax on the poor.)

Take the $2 you’d spend on a weekly lottery ticket and instead invest it. Invest it, ideally, in Vanguard low-cost index funds.

Over 30 years’ time, taking into consideration compounding interest, you could turn that $2/week, $104/year into 20,632.85. (I used this compounding interest calculator from MoneyChimp.com). I also used an interest rate of 10 percent, which is a conservative number. It’s important to note that the returns are usually better than that for Vanguard low cost index funds. They have an average annual return of more than 11 percent.

Screen Shot 2018-10-19 at 10.03.21 AMAnd this number is actually pretty low. Market Watch says Americans spends an average of $206.69 per year on the lottery. If you compound that amount, after 30 years you’d have $41,005.81. In New York where we live, New Yorkers spend an average of $398.77 per year on the lottery. If you take that money and instead invest it for 30 years, you’d have 79,113.11 at the end, give or take. That’s a nice way to make a $7.65 per week investment grow.

Screen Shot 2018-10-19 at 10.56.03 AM

Todd just said to me, “But that’s nothing compared to millions.”

Right. But you’re not going to win. Remember that.

If you think your $2 (or more!?) is going to some good, worthwhile cause like education or the environment – don’t be fooled.

From this Fortune article:

“Patrick Pierce, a political science professor at St. Mary College, has studied lotteries and how states spend the revenue lotteries generate. He found that education spending does jump in the first year after a state adopts a lottery system. But after that, the pace of education spending tends to slow. By the eighth year, education spending is actually lower than it likely would have been if the lotto had not been adopted. Pierce says the money that would have gone to school spending is diverted elsewhere or used for voter-friendly tax cuts.”

 So if you really want to see your $2 (or a couple bucks more) translate into something much, much more than it’s worth now, don’t spend it on the lottery. Invest it wisely and watch it grow.

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