$2.2 billion up for grabs – the best way to guarantee a lottery payoff

PROMO 660 x 440 Finance - Lottery Balls Numbers Drawing - iStock - spfdigital
Published Sunday, October 21, 2018

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.