21% Think The Lottery Is The Best Wealth Builder

[jeffrey]

In a survey conducted by the Consumer Federation of America and the Financial Planning Association, people were asked what was the most practical way to accumulate several hundred thousand dollars. While over half (55%) said saving a little each month over many years was the correct approach, 21% said the best way is through the lottery. Another 11% said that the best way was to inherit the money and 3% said getting a big insurance settlement was the way to accumulate the money

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The poor chose the lottery method far above the wealthy. 38% of those with incomes under $25,000 chose the lottery as the best way to gain wealth while only 9% (that's still one in 10) of those earning more than $75,000 said the lottery was the way to go. African Americans (30%) and those over the age of 65 (31%) also chose winning the lottery as the best method in higher numbers than the average.

A few other tidbits from the survey that made me cringe:

Only half of Americans understand the meaning of net worth and less than half know how much their net worth is.

Less than 10% of Americans believe they can save $1 million over a 30 year period.

[baselle]

Re: 21% Think The Lottery Is The Best Wealth Builder

Aaaaaaaauuuuuurrrrrrggggghhhhh! We are a nation of idiots.

[locolorenzo24]

Re: 21% Think The Lottery Is The Best Wealth Builder

Hey, you mean out of 9999999999999999999999999999999999999 combinations, I only have to win one? Boy sounds easy!!! Where do I sign up. My favorite is that you could spend 1000 on one drawing and not win anything!!

[cercis]

Re: 21% Think The Lottery Is The Best Wealth Builder

I *KNOW* I can't save $1m in 30 years unless something changes drastically. Assume $25k/year - that's not really possible considering our incomes have topped out and the only way to get more is to change to much less satisfying jobs. Maybe if we pay off our house, we can get half way there (right now we've got some luxuries in our budget, but not $25k/year worth).

[terry1156]

Re: 21% Think The Lottery Is The Best Wealth Builder

Whenever people ask me to play the lottery, I always pick 1, 2, 3, 4, 5, 6 and 7 as the bonus. They look at me like I'm crazy and say, "those numbers will ever come up!" and I say "exactly - and the chances are the exact same as the numbers you pick"

[Ima saver]

Re: 21% Think The Lottery Is The Best Wealth Builder

You don't have to save the whole million in 30 years, that is the magic of compound interest. It is quite possible to start saving now and have a million dollars in 30 years. We lived on our savings while building a house 21 years ago. so, we started with almost nothing 21 years ago except our house.
I now have $600,000 in savings and a paid for house worth over $500,000. In effect, over 1 million in assets. My husband and I made $400 a week combined when we started our savings goals.

[PRICEPLUS]

Re: 21% Think The Lottery Is The Best Wealth Builder

The house is bought and paid for. The cars are bought and paid for. I have reached the halfway mark for my DD college money. I am now saving for retirement but have a lot of work to do on this.

I can't believe anyone would depend on the lottery. Hard work and living frugally are the only way to go. It is interesting to note though that a great many lottery winners end up bankrupt. Is that ironic or what?

[cercis]

Re: 21% Think The Lottery Is The Best Wealth Builder

Here's the problem I've had with interest:

I had a 401(k) which was as diversified as I could get with the company choices - it lost over 40% of its value in one year. So, I ended up only getting out a little less than I actually put in it (I had to withdraw it, the company laid me off and were going to start charging me for "managing" it).

All of my investments end up that way. I can go with these nice wonderfully performing funds and as soon as my money touches it, it drops immediately. I've got the opposite of the Midas touch.

So ... the only way for me to actually save money is to stick with the most conservative investments possible, those pay all of 2% right now. I'll never make it to a million on that.

I expect to inherit quite a bit (I could be wrong, they could lose it all to final illnesses, etc). That will be what will get us through. Plus, we try to have at least one of us working for a gov't agency so we can get that pension. And, of course, we watch our health so we can work as late in life as possible.

[Optsol]

Re: 21% Think The Lottery Is The Best Wealth Builder

I forget the exact quote, and who made it, but the paraphrase is something like:

"the lottery is the most viscious tax on the poor".

It's awful, but it's such a strong profit driver for states, that it'll never go away.

[cercis]

Re: 21% Think The Lottery Is The Best Wealth Builder

My friends call it "the stupid people tax". I don't go that far (but I don't play). I know that for some people I know, they may never have enough money unless they have a windfall like the lottery. They work making minimum wage and just can't break out of that cycle. They can't take classes at a "local college" because the "local college" is at least 20 miles away with no public transportation and doesn't seem to offer night courses. They don't have internet access to take classes online (if they could even afford that). Right now, their whole lives are just a struggle to have enough money to buy food and pay rent.

I voted against it in OK, but I lost. What really gets me is that the way these are normally set up in the states, most of the money goes to the company who manages the lottery, so the state generally sees less than 30cents/dollar.

[Ima saver]

Re: 21% Think The Lottery Is The Best Wealth Builder

Yes priceplus, you are right. I have seen shows where people won millions in the lottery and 15 years later they have nothing to show for it. They blew it all instead of saving it. I don't play, but if I did and I won, I would pay off my two debts and save the rest.

[cercis]

Re: 21% Think The Lottery Is The Best Wealth Builder

If someone gave me a winning ticket (the only way I'll ever win). I'll pay off my debts, buy some revenue producing investment, and then have some fun.

Part of my fun would be setting up a foundation, but the rest would be traveling and getting the toys I always wanted. Even if I used all the money, I'd have had some experiences that were worth it - and I'd be out of debt and have some assets.

[BAGAGT1]

Re: 21% Think The Lottery Is The Best Wealth Builder

Here's the problem I've had with interest:
I had a 401(k) which was as diversified as I could get with the company choices - it lost over 40% of its value in one year.

A lot of people lost a lot of money after the dot com bubble burst, and five years later, they have yet to recoup their money. Unfortunately, the mainstream media preaches buy and hold, I disagree. The retirement funds and your home will be your largest assets when you retire, and yet most people do not pay as much attention to their 401k's and IRA as they do thier homes.

So, I ended up only getting out a little less than I actually put in it (I had to withdraw it, the company laid me off and were going to start charging me for "managing" it).

You should have rolled it over into an IRA to avoid the taxes and the 10% early withdrawal penalty.

All of my investments end up that way. I can go with these nice wonderfully performing funds and as soon as my money touches it, it drops immediately. I've got the opposite of the Midas touch.

I think we've all felt that way at some time. The key is to consistently deposit money into your 401K, IRA, or other retirement accounts, and keep an eye on them (say about once a month). If any investment starts looking like a dog, move it into something better, or if they are all starting to retreat, move it into a money market fund until the markets improve.

[cercis]

Re: 21% Think The Lottery Is The Best Wealth Builder

I wasn't clear, I did roll it into an IRA. It's still there. Drawing all of about 2% interest. However, it's safe. It can't lose value.

[Fern]

Re: 21% Think The Lottery Is The Best Wealth Builder

I forget the exact quote, and who made it, but the paraphrase is something like:

"the lottery is the most viscious tax on the poor".

It's awful, but it's such a strong profit driver for states, that it'll never go away.

Well, that's true, lotteries will never go away, but who said being poor and not making intelligent choices were synonymous? They always have a choice.