Lottery as an investment?

I noticed this story from the Associated Press on InForum earlier this week:

St. Cloud man turns $100 a week into $1 million
ST. CLOUD, Minn. — A St. Cloud man who spent $100 a week for the last 12 years playing the Minnesota Lottery has finally won. Daniel Goke’s ticket was one of two tickets drawn on New Year’s Day for the Minnesota Millionaire Raffle. He’ll take home more than $677,500 after state and federal taxes.
The 54-year-old estimates he’s spent more than $62,400 playing the lottery. He plans to pay off his house and truck, buy a boat and make a few investments. Goke, who’s been an assistant manager at Wal-Mart for 12 years, tells the St. Cloud Times that he’s cashed a winning ticket three other times. He’s won $100 and $250 twice. He says he plays the lottery because it gives him a chance to win.

You could say this man did turn an investment of $62,400 into $677,500 in 12 years. Of course, his odds of doing that were 1 in 300,000. But let’s say you took that $100 a week for 12 years and invested it in a mutual fund or other balanced investment portfolio, averaging an 8 percent return (a common rate used by investment advisers).  How much would you end up with then?

Doing the calculations at PowerPay.org, that investment would have netted $111,947.50.

While those sort of returns aren’t guaranteed, the odds are far better than 1 in 300,000.

2 thoughts on “Lottery as an investment?

  1. I was thinking the same thing when I read the story. A few dollars a week may not seem like alot, but over time it adds up. That is why it is important to track your spending so you can see where your money goes.

  2. Pingback: Lottery as an investment? | Forum's Financial Fix-Up | The Home Working Blog

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