Is Buying Lottery Tickets a Waste of Money? Experts Weigh In
Do you ever fantasize about what life would be like if you won the lottery? You might imagine retiring early and going on a shopping spree with your millions, or billions, of dollars awarded from the Powerball or Mega Millions.
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The reality is far less magical. Anyone who hopes to win the lottery starts by buying tickets and hoping to match the winning numbers. Buying tickets, however, doesn’t mean you’re guaranteed to win anything, and countless Americans often put more money into playing the lottery than they get out of it — or they can afford.
As with playing any game though, the odds of winning could potentially lean in your favor eventually. So, should you play the lottery?
The Lottery: To Play or Not To Play?
The financial experts GOBankingRates spoke to were unanimous that if you have a long time horizon ahead of you, it’s not wise to spend it, or your money, playing the lottery.
According to a 2023 Money Talks study from Empower, 71% of Americans said they have purchased a lottery ticket. Despite this high percentage for buying lottery tickets, only one-third of Americans have spoken with a financial advisor.
“Where people get in trouble is thinking the lottery is going to be a magic bullet that solves your money troubles,” said Robert Persichitte, CFP at Delagify Financial. “You have to go in with the expectation that any money you spend is gone.”
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A Better Way To Ensure Financial Security
Want to play a game that rewards financial savvy? Put your money toward investing in the stock market instead.
Patrick Di Cesare, CFEI and owner of the financial education company Basic Financial Literacy, said someone who spends $20 a week on the lottery is spending $1,040 a year. If the same person took this $1,040 a year and invested the money into an S&P 500 index fund, Di Cesare said it would yield about $171,000 after contributing only $31,000 over 30 years.
“This figures for a 10% return, which is what the S&P 500 has averaged the last 100 years,” Di Cesare said. “All of this money is tax-free if it’s in a tax-advantaged retirement account like a Roth IRA.”
Robert R. Johnson — CFA and professor of finance at Heider College of Business, Creighton University — agreed with Di Cesare about playing the stock market as a better way to ensure financial security.
Unlike the lottery, which is a game ultimately rigged against its players, the stock market is rigged in an investor’s favor. There’s also entertainment value to be found in investing in the stock market as investors will experience satisfaction watching their account grow.
“There was an exchange between Jeff Bezos in which he asked Warren Buffett ‘Your style of investing is so simple. Why doesn’t everyone just copy you?’ Buffett replied, ‘Because nobody wants to get rich slowly,'” Johnson said. “That sums up the fascination with the lottery.”
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This article originally appeared on GOBankingRates.com: Is Buying Lottery Tickets a Waste of Money? Experts Weigh In
