Why do you necessarily need two cars? There’s something to be said for going out of your way to not have a second car.
We always had that.
My parents never made more than $75k combined in any one year and most years made half that.
There are a couple tricks, both in #5.
a) When a university evaluates your financial aid requirements, they can’t and don’t touch your home. If almost every cent of your wealth is the equity of your home, guess what? The kid’ll get a generous financial aid package that has lots of grants in it.
b) If you’ve got a bright teenager, he can usually take some night classes at the local state college. You could be looking at 3 years between the end of high school and a Bachelor’s degree…
c) You are allowed to choose a state with a good or great public university in it. Public university costs in state are typically under $10,000 per year.
d) Twenty thousand dollars invested at eight percent for fifteen years is sixty three thousand four hundred dollars. Even if public university tuition rises 5% per year, that’s still more than four years at state u will cost.
$15 per week invested at an average return of eight percent (a couple percent less than you’ll typically get in a no-load stock index fund and about what you’ll get in bonds) yields $38500 after twenty years.
If you’re willing to take more risk, you can go with a “growth” fund or some higher-risk medium-term bonds - a couple percentage points of risk in exchange for a couple more percentage points of return in good years. At twelve percent that fifteen bucks a week is $65000. Cash that out over three years and you’ll pay fifteen percent in capital gains tax leaving $55000. That’ll put a good-sized dent in your mortgage… and there’s about a five percent chance you’ll lose most of it and a ten percent chance you’ll make little in interest overall. That’s a damn sight better than playing the pick-six.
There’s an old saying “nothing ventured nothing gained”. If the only risk you’re willing to take is losing an Andy per week, and the only reward you want is a quick cool million, you’re playing against some damned high odds and an avaricious house. The people running a lottery make money if you come out behind. The people in the stock market make money if you come out ahead. Who are you going to trust your money to?
In your OP title you ask for “the best chance” for the “average person.” I would say the best chance for someone of average background to become wealthy would be to work hard at something. As mentioned in a prevoius post, the majority of millionaires today got that way by working hard, not lotteries, or inheritence. If one is not willing or able to start a new business which seems to be the way it is done most often, then I would think investing in the stock market would give you much more of a “chance” than the lottery.
The average person can find a way to come up with say $30 a week without significantly altering their lifestyle. Skip a few dinners out, wait and rent the DVD instead of going to the movies, bring lunch rather than buy out, quit smoking or buying things in vending machines, cancel the cell phone, etc. That is going to give you $1,560 the first year to play with. Take that money and invest in some high risk penny stocks and maybe a few not so risky stocks.
My father-in-law, when he was just starting out invested in several little start ups. He only had a small amount to invest, spread it around as he could, and when one of them, Humana, price shot way up, sold it and invested that money in several more companies. Some were good investments, some were not. He sold most way too early for maximum profit, but he just kept at it. When he passed away he left his wife with several million dollars. It wasn’t all luck with him. He studied the market and learned what trends to look for. I know many others who have a similiar story.
The stock market, or investing in things like gold can be risky and is not guaranteed to bring wealth, but I am sure more have accumulated wealth that way than in the lottery. If you are willing to spend $10 bucks a week on something that gives you a 1 in 16 million chance of winning, why not take it and invest in something that you have some control over and take a shot in the market. It will have its ups and downs, and it will take time to build up enough to really be a player, but that has to be a better “chance” than just throwing money in the lottery and hoping for a miracle.
If, by wealthy, the OP means have millions and millions and millions of dollars, then the answer is probably no. While a lucky strike at the lottery may do that (heck, even I plunk down a dollar every now and again on the “You never know…” theory) your better bet is to try to start your own business and expand it.
If, by wealthy, you mean “have enough to live comfortably when retired,” then the answer, again, is still no.
Your best bet for that is to save and invest. Start young and stick to it.
If a person begins at age 20, puts away as little as $5 a working day* (sometimes it’s as easy as taking the money you would have spent on a Starbucks coffee and muffin in the morning and putting it away) and invested it at 8% per year, by the time you were 65, you’d have over half a million. Don’t touch it until you’re 71 and you’ll have close to 840K. Of course, if, as your income goes up you put away more, you’ll do even better.
Even if you start later, you could still do OK. Suppose you didn’t start until you were 33. If you put away $10 per day* ($50/week is not an unreasonable amount for someone earning 50-70K), then by the time you’re 65 (at 8%), you’ve got 364K and change. At 71, you’d have 597K. Again, up the amount and be a bit more agressive in your investing, and you could do much better.
Zev Steinhardt (who constantly kicks himself for his shortsightedness at cashing out a $1200 401(k) at age 24…)
Zev Steinhardt
- Assuming 250 working days per year.
So I can “work hard” at my temp job at $7.00/hour and become a millionaire? Whoo, hoo!
Well, no one has disproven my assertion given the following stipulations for the “average” person.
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No ability to start their own business due to risk avoidance, lack of seed funds, and or no business skills to speak of.
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I think most of you are describing “middle class” while I am describing “lower working class”. I know many people (and was in touch with many more when we had our mortgage company) who survive on the wife earning $8.00 per hour at Wall Mart while the husband pulls in $700.00 on disability. There credit is bad, their credit cards maxed, and they have little or no equity in their $70.000 dollar home (which very well might be manufactured). Hell, I’m practically in that situation. I have no skills or talants to speak of other than debating. I’m trying to make it through nursing school at 35, and although I think I might make a good nurse, I’ll probably fail out on the bed making competency next week or possibly the catherization competency with a sterile field the following week because I am almost “illiterate” when it comes to learning physical skills (at least to the specifications of nursing instructors who want it done in a 50 step process very unlike the real world). The best job I could go out and get would probably be Wall Mart, or possibly an Assitant manager type position at Village Pantry. I have over 200 college credits with a 3.8 GPA, but no degree. I am worse than a poor sales person (I used to actually talk most people out of doing refinance loans who wanted to do them when we had the mortgage business because I often felt it wasn’t in their best financial interest). I owe more than the national debt in student loans and yet have no more earning power than your typical street person. My wife has been accepted to a CRNA program which would allow her to earn almost 200,000 per year after graduation in many parts of the country especially Texas, but she cannot afford to go because I cannot support her. I drive a 1994 Corolla with 320,000 miles on it and I would be homeless but for the 80,000 dollar run down ranch house (which we almost lost due to late mortgage payments last month until our student financial aid checks came) that my mother left me. I honestly think that the lottery is my best chance of having anything (actually I think nursing school would be if I could avoid failing out). Furthermore, I know (or have met) many others in similar (and yet unique) circumstances.
The total chance to have won after having played 5 tickets every week for 1500 (fifteen hundred) years is 1% (one percent).
It would be far more likely to take the Chris Moneymaker approach. Play poker online until you win a bankrolled entrance into the World Series of Poker, and then simply win it all. Much easier than winning the lottery.
What I am saying is that someone working as a temp for $7.00/hour is going to have more of a chance at becoming wealthy by working hard than throwing money away in the lottery.
Who would you bet on?
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Someone who slacks off as a temp, does enough to keep their job and puts $10 bucks in the lottery every week.
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Someone who works their but off, gets noticed and promoted, gets a raise, and then invests that raise.
Neither is a guarantee to become a millionaire, but if I had to bet on one, I would pick the one who has a plan and works hard at it, rather than the one who settles for a 1 in 16 million lucky break.
If we could find all the people who ever worked for $7.00/hour and then located all of those that have gone on to be worth a million dollars, what % would be because they played the lottery every week and what % would be because they worked hard to get there?
No, working hard does not guarantee you become wealthy, lots of people work hard and just get by, but working hard signifcantly increases your chances. The OP asked what would give someone who starts with nothing more of a chance to become wealthy than playing the lottery. My answer, along with several other posters agree that taking that money and investing would be more likely to produce a millionaire than the lottery would. And if you can get promoted, take a second job, or cut unnessary expenses, then that person will have more money to invest, thus increasing their chances of wealth.
Of course playing the lottery doesn’t preclude working hard. In fact as “poor” (a very relative term considering that I live in the wealthiest country not only on Earth, but in the history of the Earth) I can think of many things I could give up to pay for my lottery tickets. For example:
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I could give up HBO, SHowtime, and Stars keeping only basic cable (of course my wife might not allow this).
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I could reduce our eating out from about seven to six or less times per month.
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I could pack my lunch more often when going to school instead of spending three dollars at Wendys for a side salad, chili, and plain baked potato (one of the best values in fast food in my opinion).
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We could switch from Wall-Mart to Aldi’s saving an additional ten percent or so on groveries, that’s about ten dollars per week.
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I could not rent video games from Blockbuster for my son so often.
Roland, go play the lottery. Given your attitude, it’s the only way you’ll ever become rich. Of course, if you do win, I fully expect that you’ll be back at broke when the 20-30 years of payouts are over, but hey, at least you’ll have been rich, right? At that point I’m sure you’ll pick right up paying your stupidity tax every week, rain or shine.
Meanwhile, I’ll be over here, continuing to do what I have been, and I’ll be a millionare by the time I’m 45.
You weren’t paying attention, were you? If you can afford to buy ten lottery tickets a week, then you can afford to put ten bucks a week into the riskiest stock or mutual fund investment you can find. You’re still likely to lose most of it, but your odds of becoming a millionaire are far better that way than they are with the lottery.
And they’re pissing away money on lottery tickets?
Well, I will grant this. Playing the lottery is probably the most likely way somebody is going to get a million dollars if they don’t want bother putting any effort into the attempt.
There’s a quote something to the effect:
“Most people do not recognize opportunity knocking on their door, because it is usually dressed in work clothes”.
Well, I am actually to lazy and inconsistent to play the lottery anyway. On those occassions that I’ve bought tickets (maybe ten or twenty times in my life) I don’t think I’ve ever remembered to check my numbers. Futhermore I usually lose the ticket by the next day. So what’s your best chance if you are to lazy, and unorganized to even play the lottery?
Oh, that’s right marry someone who will support you!
By the way how does the “hard work” advice help someone who isn’t good at anything? That’s right I’ve never done anything in my life where people said you were “born to do that”. Okay, quite a few people have said that I would make a very good crimnal defense attorney because of my delight in finding loopholes, and the fact that I will argue a point to the end of eternity. However, I held a wide variety of positions ranging to assistent manager at Pizza hut, waiter, night stock guy at Marsh grocery mortgage loan originator (where I was considered a genius at finding programs to do impossible loans, but I was such a bad sales person it didn’t matter), real estate appraiser trainee, home health aid (the current family I work with loves me, but only because their kids like me, not because I can do the “skills” very well), home improvement sales, medical collections. I can’t say that I’ve even been considered “talented” at any of those positions. In fact in most cases I had to work twice as hard as everyone else just to be good enough to “maybe keep my job” (for example as a mortgage LO, I put in close to 100 hours per week when everyone else worked maybe 50 and my closed loans were about 50% of everyone else). Seriously, when you don’t seem to have a talent for anything what do you do? You say “what are your interests” Well I would like to be cop, but my vision sucks (20/800 without glasses and 20/60 with). I like nursing, but may not be able to do the “skills” to the standards of nursing school professors. I like medicine and used to read Harrison’s Guide to Internal Medicine cover to cover almost every year, but hey I’m 35 so it’s a bit late to think of medical school (although I did take the MCAT’s and scored in the upper 10th percentile overall, but that was six years ago before I returned to college for nursing). Hell, my vision is not even good enough to let me drive a cab (my wife has a friend from Ethiopia who’s husband drives a cab and makes about 60K per year). Tell me something that I CAN do to possibly earn good money (or even support my family) and I promise I will listen.
In answer to the OP, I’ve heard it said that the chances of winning the lottery are so negligible that they’re not materially lessened by not entering.
And yet many hundreds if not thousands of millionaires are created by the lotteries of the world every year. Again, how many would “sleep well” given my “dealth lottery” scenario? I suspect more than a few would listen to the “names” every night so that they could try and protect their families if their number came up.
I think Roland might have a point. While investment might have a high average rate of return, it has a low standard deviation. OTOH, lotteries have a crappy rate of return but a hugh SD. So while there might be more people making $100,000 out of investments than the lottery, it might well be there are more people making $10,000,000 out of the lottery, especially when it seems that Roland is intent on conflating “average” with “unambitious”.
Well, I would say “untalented” rather than unambitious. For those of us who lack natural talent (or it lies in areas that are not open to exploitation due to other limitations, for example those who might have made great hockey players but are now 35 having never even ice skated in their lives). Most of the people I’ve worked with in my life would say that I’m exceptionally hardworking and driven (for example my fellow loan officers thought I was insane for working virtually all nights and weekends). However, they would say that my drive is only matched by my ineptitude. Thus, for those like myself I would argue that the lottery is by far my best chance of obtaining wealth especially if I stipulate that as wealth before retirement.