Fool.com: The Lure of the Lottery [Fribble] May 12, 2000

Fribble The Lure of the Lottery

By pomorski@umich.edu (Michael S. Pomorski)
May 15, 2000

The Big Power Ball Super Lottery, or whatever the heck it's called, recently went up to $320 million or something like that. Of course, that had everyone in a tizzy. Unfortunately, that feeling was contagious for me last week.

I know what the odds of winning are -- one in a lot, and by a lot I mean a LOT. I'd have a better chance of getting hit by lightning while being worshipped by Heidi Klum because my record, "Mike Sings, Heidi Listens," went triple-platinum despite the fact I'm a worse singer than William Shatner.

However, when one of my co-workers asked me if I wanted to buy into the office lottery pool for $5, I said yes. Never mind the fact that just last Friday 60 people paying $5 each had won a grand total of $18. Yup, that's $300 down to $18, which means they lost 94% of their money. Basically I threw away one day's worth of lunch money on, well, nothing, most likely. Sure, we could win the big one. Then that $5 would be worth about $5 million before taxes, provided nobody else wins. Thing is, I'm not that lucky!

Then again, I have spent maybe $5 total on lottery tickets up to this point in my life, so it's not like I'm going to go broke here. I invest well over $5 in DRIPs per month. I've saved myself well over $5 in credit card interest per month by paying down my credit card debt. I'm not counting on this money to make me financially secure; I'm saving my way to financial security. So in a way I'm already ahead of the game!

If any of you are playing the lotto, I wish you luck. Really, I do! I'd be very happy to see a fellow Fool win millions of dollars. However, there are better ways to become financially secure. The stock market averages a return of 12% per year as measured by the S&P 500 index. That certainly beats the socks off the 94% loss incurred by my coworkers (and myself) by playing the lottery!

The moral of the story is that the lottery may be fun every now and again, just don't bet the farm on it.

Fool on!