If You Win The Lottery, Do THIS With The Money...

Lotteries are played by millions across the globe, with the aim of winning life changing money, in exchange for a small weekly or monthly fee.

Everyone knows the odds of winning the lottery are incredibly low.

But, the hope of winning millions wins over a lot of people, and it’s believed over 50% of UK adults buy at least one lottery ticket each month.

Some call it luck.

Others like myself see is as nothing but probability.

But, I want to talk about whether the lottery is worth playing, and more importantly…

What to do with your winnings if you get lucky.

Should You Buy Lottery Tickets

I’m a bit of a maths nerd.

When it comes to gambling, and the lottery, I don’t base it off of luck.

It’s probability. Chance. Odds.

Not luck.

So, I’m going to take a look at the odds of winning three popular lottery games available to me in the UK:

• Odds of winning The National Lottery — 1 in 45 million. Draw is 2x per week.

• Odds of winning Euro Millions — 1 in 139 million. Draw is 2x per week.

• Odds of winning Thunderball — 1 in 8 million. Draw is 4x per week.

So, using plain ol’ mathematics, let’s see how long it would take for the average lottery player to win.

Assuming you bought one ticket per draw…

• The National Lottery — 432,692 years.

• Euro Millions — 1,336,538 years.

• Thunderball — 38,461 years.

Pretty unlikely, right?

When it comes to gambling in general, I’m with Warren Buffett on this…

“I’m not a prude about it, but to quite an extent, gambling is a tax on ignorance. It relieves taxes on those who don’t gamble.”

Lotteries and gambling sites are very profitable, and there’s a reason for this.

For a lot of people, though, the hope itself is worth the few dollars a week that you’re paying for your tickets, which is fair enough.

But for me, it’s not worth it.

I’m putting my money into places where I know I’ll get a good ROI.

Why Lottery Winners Go Broke

Statistics show that around 70% of lottery winners go broke, and over 30% will declare bankruptcy.

Having gone from the euphoria of winning millions, to being in the exact same position as you were prior to the win…

Could you imagine how bad that must feel?

I’ve read my fair share of stories on people who won the lottery, but soon went bankrupt.

The most famous story being that of Michael Carroll, the 19 year old bin man who won the lottery on his first go in the early 2000’s.

He won £9.7 million, and despite giving several million away to family members (fair play!) he found himself spending thousands each day on drugs and… “female companions”.

That’s right. Thousands of pounds… every day.

The money lasted him nine years, and in 2010 he reapplied for his old job as a bin man.

You can’t deny the guy must’ve had a cracking time during his 20’s.

But, I think I can speak for a lot of people when I say that the thought of losing all that money and being back at square 1 after nine years, doesn’t seem worth it.

It really does emphasise the lack of financial education in society, and how even the slightest bit of financial knowledge can prove to be life-changing for some people.

And the main problem is an education based problem.

It’s to do with the money itself, and what you do with it.

What You Should Do With The Money

Give it all to me. The end. Just kidding. Well, you can if you want.

But, on the off chance you don’t want to give all of your lottery money to me, I can sum up what you need to do in one sentence:

You need to put the money to work.

Say you win $10 million like our mate Michael Carroll.

Life changing money, for your entire bloodline.

The average person would have the mindset of living off the $10 million.

Allocating yourself, say $200,000 a year, which will last you 50 years.

• No work.

• No stress.

• No unwanted obligation.

• Free to do whatever you wish.

Perfect, right? Wrong.

$200,000, your hypothetical salary, is some 2% of the total amount you’ve won.

This means that if you’re able to generate a 2% return on your money, or more, you can live the same life you had planned, except there’s one crucial difference:

Your $10 million doesn’t get touched.

Even the safest index funds like The S&P 500 have netted 8–10% annual returns for investors since the second world war.

Why not put the $10 million to work, and live off the interest?

It could be:

• Interest from a high yield savings account.

• Dividends from the stock market.

• Value appreciation from growth stocks/ETFs

• Rental income from Real Estate.

You can keep it super low risk, of course.

This way, you’ll never run out of cash, for generations to come, and your winnings never dwindle.

It’s a simple mindset shift.

DON’T:

Live off the winnings…

• $10,000,000 / 50 years = $200,000 a year.

• Money after 50 years = $0.

DO:

Invest the winnings, and live off the interest…

• $10,000,000 + 5% annual return = $500,000 a year.

• Money after 50 years = $10,000,000+

You’re welcome.

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