Why You’re Better Off Investing Your Weekly Lotto Ticket

For many, purchasing a weekly lotto ticket is a small indulgence with the dream of winning big. However, the odds are overwhelmingly stacked against you. Instead of spending that money on a lottery ticket, consider investing it. The potential returns from even modest investments can be substantial over time, thanks to the power of compound interest.

The Reality of Lotto Odds

Powerball

  • Cost: $15 per Powerdip (10 lines of Powerball)

  • Odds of Winning: 1 in 3,838,380

  • Average Prize: Over $11 million

Regular Lotto

  • Cost: $7 per Lucky Dip (10 lines of Lotto)

  • Odds of Winning: 1 in 383,838

  • Average Prize: Over $350,000

Understanding the Odds

While these figures are enticing, the odds make winning a long shot. Lotto NZ explains that if you buy a $7 ticket, your odds of winning first division are 1 in 383,838. It's natural to think, "Hey, that’s a chance!" But before you get excited, you should know that our brains aren’t wired to appreciate such low odds, and those are indeed low odds.

To put this into perspective, let’s think about the number of stars in the night sky. Did you know that there are only 4,548 stars visible to the naked eye in the southern hemisphere? Your odds of winning first division (1 in 383,838) with a $7 ticket are the same as picking just one correct star in the night sky over the next 84 nights. Similarly, your odds of winning Lotto Powerball with a $15 Power Dip ticket (1 in 3,838,380) are the same as choosing the right star from all the visible stars over the next 843 nights!

Information from Safe Gambling NZ.

Investing Instead of Playing

Regular Lotto Investment Scenario

  • Investment: $7 per week

  • Annual Return: 8%

  • Time Frame: 30 years

After 30 years, your weekly $7 investment would grow to approximately $42,832. Here's the breakdown:

  • Total Contributions: $10,920

  • Compounded Interest: $31,912

Doubling the Investment

  • Investment: $14 per week

  • Annual Return: 8%

  • Time Frame: 30 years

After 30 years, your weekly $14 investment would grow to approximately $85,664. Here's the breakdown:

  • Total Contributions: $21,840

  • Compounded Interest: $63,823

Powerball Investment Scenario

  • Investment: $15 per week

  • Annual Return: 8%

  • Time Frame: 30 years

After 30 years, your weekly $15 investment would grow to approximately $91,783. Here's the breakdown:

  • Total Contributions: $23,400

  • Compounded Interest: $68,383

Doubling the Investment

Maybe you play twice a week? Let’s double the investment to see what that looks like.

  • Investment: $30 per week

  • Annual Return: 8%

  • Time Frame: 30 years

After 30 years, your weekly $30 investment would grow to approximately $183,565. Here's the breakdown:

  • Total Contributions: $46,800

  • Compounded Interest: $136,764

Money You Will Likely See Again vs. Money You Will Likely Never See Again

When you invest your money, you are putting it to work for you. With an 8% annual return, you are much more likely to see significant growth over time. This contrasts sharply with the extremely slim odds of winning the lottery. By investing the money you would spend on lotto tickets, you can build a substantial nest egg that can provide financial security and support your retirement goals.

Turn your dreams into plans

While dreaming of a lottery win is fun, the reality is that investing your money wisely is a much more reliable path to financial growth and security. By choosing to invest rather than gamble, you are making a decision that can positively impact your future and help you achieve your financial goals. Instead of betting on the nearly impossible odds of winning the lottery, invest in your future with a plan that can help you build real wealth.

References & Notes:

If you want to know more voluntary contributions towards your KiwiSaver, or if you want to learn more about planning ahead for your retirement, please complete one of our quizzes below and book in a time to speak to Adam.

Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.


Previous
Previous

New Zealand Superannuation Rates 2024 and 2025

Next
Next

Our Choice in Ethical KiwiSaver Fund Options