$2.2 billion up for grabs – the best way to guarantee a lottery payoff
Note: this article was originally published January 7, 2018, and has been updated to reflect current lottery jackpots.
Between the Mega Millions jackpot estimated at $1.6 billion, and the Powerball jackpot standing at over $600 million, many people are thinking about what they could do with the proceeds from a big win.
Dreaming about untold riches is fun, though we all know the possibilities of winning are slim. The chance of winning the Powerball grand prize is 1 in 292 million, while even the chance of winning a $4 prize is 1 in 38. Overall chances of winning anything are just 1 in 25. For the Mega Millions lottery, the chance of winning the grand prize is worse – 1 in 302 million, though the overall odds are slightly better at 1 in 24.
The take-away? You’re not likely to win, and if you do win, you’ve probably lost more money over time than you won. Let’s look at a way you can win with your lottery ticket dollars.
The basic cost of a Powerball or Mega Millions ticket is $2, and both games have drawings twice per week. To enter all four drawings each week, you’ll spend $8. For many people, that doesn’t seem like much – unless they realize they are spending $416 each year, or over $4,000 each decade. If you work 40 years, that’s over $16,000 tossed away – not to mention lost earnings if you invest the money.
Investing the money is the key to your big lottery payoff.
Every week, save the $8 you would have spent on lottery tickets. At the end of the year, put the $416 you saved into an account earning at least a 5% return (we won’t discuss types of investment accounts here, but 5% is a reasonable return). Don’t touch it, and follow the same steps every year.
After 10 years, you will have invested $4,160, and earned an additional $1,072, for a total of $5,232.
After 20 years, your investment will be worth $13,735. After 40 years, your $8 per week saving habit will have a value of $50,252. That’s $16,640 of your own money, plus $33,612 in earnings.
Your lottery dollars can pay off – just don’t buy a lottery ticket to do it!
Here’s the breakdown of your earnings:
Year | start principal | start balance | 5% earnings | end balance | end principal |
1 | $0.00 | $0.00 | $0.00 | $416.00 | $416.00 |
2 | $416.00 | $416.00 | $20.80 | $852.80 | $832.00 |
3 | $832.00 | $852.80 | $42.64 | $1,311.44 | $1,248.00 |
4 | $1,248.00 | $1,311.44 | $65.57 | $1,793.01 | $1,664.00 |
5 | $1,664.00 | $1,793.01 | $89.65 | $2,298.66 | $2,080.00 |
6 | $2,080.00 | $2,298.66 | $114.93 | $2,829.60 | $2,496.00 |
7 | $2,496.00 | $2,829.60 | $141.48 | $3,387.08 | $2,912.00 |
8 | $2,912.00 | $3,387.08 | $169.35 | $3,972.43 | $3,328.00 |
9 | $3,328.00 | $3,972.43 | $198.62 | $4,587.05 | $3,744.00 |
10 | $3,744.00 | $4,587.05 | $229.35 | $5,232.40 | $4,160.00 |
11 | $4,160.00 | $5,232.40 | $261.62 | $5,910.02 | $4,576.00 |
12 | $4,576.00 | $5,910.02 | $295.50 | $6,621.52 | $4,992.00 |
13 | $4,992.00 | $6,621.52 | $331.08 | $7,368.60 | $5,408.00 |
14 | $5,408.00 | $7,368.60 | $368.43 | $8,153.03 | $5,824.00 |
15 | $5,824.00 | $8,153.03 | $407.65 | $8,976.68 | $6,240.00 |
16 | $6,240.00 | $8,976.68 | $448.83 | $9,841.52 | $6,656.00 |
17 | $6,656.00 | $9,841.52 | $492.08 | $10,749.59 | $7,072.00 |
18 | $7,072.00 | $10,749.59 | $537.48 | $11,703.07 | $7,488.00 |
19 | $7,488.00 | $11,703.07 | $585.15 | $12,704.23 | $7,904.00 |
20 | $7,904.00 | $12,704.23 | $635.21 | $13,755.44 | $8,320.00 |
21 | $8,320.00 | $13,755.44 | $687.77 | $14,859.21 | $8,736.00 |
22 | $8,736.00 | $14,859.21 | $742.96 | $16,018.17 | $9,152.00 |
23 | $9,152.00 | $16,018.17 | $800.91 | $17,235.08 | $9,568.00 |
24 | $9,568.00 | $17,235.08 | $861.75 | $18,512.83 | $9,984.00 |
25 | $9,984.00 | $18,512.83 | $925.64 | $19,854.47 | $10,400.00 |
26 | $10,400.00 | $19,854.47 | $992.72 | $21,263.20 | $10,816.00 |
27 | $10,816.00 | $21,263.20 | $1,063.16 | $22,742.36 | $11,232.00 |
28 | $11,232.00 | $22,742.36 | $1,137.12 | $24,295.47 | $11,648.00 |
29 | $11,648.00 | $24,295.47 | $1,214.77 | $25,926.25 | $12,064.00 |
30 | $12,064.00 | $25,926.25 | $1,296.31 | $27,638.56 | $12,480.00 |
31 | $12,480.00 | $27,638.56 | $1,381.93 | $29,436.49 | $12,896.00 |
32 | $12,896.00 | $29,436.49 | $1,471.82 | $31,324.31 | $13,312.00 |
33 | $13,312.00 | $31,324.31 | $1,566.22 | $33,306.53 | $13,728.00 |
34 | $13,728.00 | $33,306.53 | $1,665.33 | $35,387.86 | $14,144.00 |
35 | $14,144.00 | $35,387.86 | $1,769.39 | $37,573.25 | $14,560.00 |
36 | $14,560.00 | $37,573.25 | $1,878.66 | $39,867.91 | $14,976.00 |
37 | $14,976.00 | $39,867.91 | $1,993.40 | $42,277.31 | $15,392.00 |
38 | $15,392.00 | $42,277.31 | $2,113.87 | $44,807.17 | $15,808.00 |
39 | $15,808.00 | $44,807.17 | $2,240.36 | $47,463.53 | $16,224.00 |
40 | $16,224.00 | $47,463.53 | $2,373.18 | $50,252.71 | $16,640.00 |
Note: local, state and federal taxes are not reflected in your earnings. Your earnings will vary with the type of investment option you choose.
