One thing that just makes no sense to me whatsoever is the UK’s obsession with the National Lottery. Every time I drop into my local corner shop there are people queuing up to buy lottery tickets – two quid here, five quid there… people just can’t seem to resist it.
The reason this is crazy to me is that your chances of winning a major prize in the lottery are extremely low. Just look at the mind-boggling odds below.
National Lottery odds
According to the National Lottery’s website, the odds of winning the main jackpot are one in 45,057,474. Meanwhile, the odds of winning the Euromillions jackpot are one in 139,838,160.
Let’s put these numbers into perspective. Here are some other interesting odds:
The odds of winning an Olympic gold medal: one in 662,000
The odds of being struck by lightning in the UK: one in 1.2m
The odds of being killed by a small meteorite: one in 1.6m
The odds of being eaten by a shark: one in 3.7m
Can you now see the absurdity of playing the National Lottery and expecting to win the jackpot? You may as well take your lottery ticket money and burn it.
A better way to generate life-changing wealth
If you’re serious about boosting your wealth, I believe you’re better off steering clear of lotteries and, instead, putting some money into the stock market. The reason I say this is that with stocks, the odds of making money are actually stacked in your favour because the stock market tends to rise over time.
Of course, you’re not going to become a millionaire overnight with stocks. Yet I wouldn’t let that put you off. Given that the stock market tends to deliver returns of around 8% per year on average over the long term, if you invest regularly, you could potentially build up a life-changing amount of wealth. Just look at Warren Buffett – he’s amassed a net worth of over $80bn by investing in the stock market.
I’ll also point out it’s possible to generate much higher returns than 8% per year as well. For example, had you invested in Fevertree Drinks – the company that makes the fancy mixer drinks you see in bars and restaurants these days – five years ago, you could have made a return of around 1,140% on your money. If you pick the right stocks, a little bit of money can grow into a large sum very quickly.
And the best bit is that you don’t need a lot of money to get started in the stock market these days. With companies such as Hargreaves Lansdown, you can start investing with as little as £100.
Given the choice between the National Lottery, where there’s a high chance of losing money, and the stock market, where the chances of making money over the long term are stacked in your favour, I see the stock market as a no brainer.
Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019