Personal Finance – The Best Guaranteed Lottery Payoff

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Published Sunday, January 7, 2018

Millions of people woke up this morning to learn that, for the fourth time in 2018, they didn't win the big lottery jackpot - and it's only the first week of January!

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 do the same 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

interest

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