Save or buy a lottery ticket?
No, really. What are the odds of actually winning the biggest Lotto 6/49 jackpot in Canadian history?
Well, I wouldn't quit your day job.
According to statistics, chances are one in almost 14 million -- well, one in 13,983,816 to be exact.
Up for grabs is an estimated $55 million jackpot which is continuing to grow.
And if you did win, it would make good sense to have a reputable financial advisor to help you with your new found wealth.
A Canadian lottery winner found out the hard way when she won $10.5 million in a lottery in April 2004 and now, just nine years later, her money has ran dry.
Or what about the Chicago man who died shortly after winning the lottery by apparent cyanide poisoning?
Is winning the lottery a good thing? Well a Markham, Ontario teacher won big and he found out who his true friends really were. Unfortunately, he found out the hard way.
But then there's the story about the retired couple in Nova Scotia who won over $11 million and they gave it all away to family and charities and only kept two per cent for themselves. Before they won, the woman was being treated for ovarian cancer, and has since passed away. To them, the money was nothing. They were glad to still have each other.
And now another lottery jackpot is bursting at the seams once again.
Just think, with that kind of money you could buy: 110 homes priced at $500,000; or 2,200 cars at $25,000 a pop; or take 5,500 $10,000 cruises; or buy about 5.5 million Big Mac meals when the Two Can Dine for $9.98 coupons arrive; retire; or start a business; or go to university -- well heck, send your kids and grandkids to university too; donate some money to your favorite charities; buy a yacht; buy an island.
But don't forget to buy a ticket. You don't have a chance at winning if you don't have a ticket. But just remember where you put it in case it's a winner because you only have 52 weeks from the draw date printed on your ticket to claim your prize.
Or don't buy your two Quick Pick tickets with Encore for $5 on Wednesday and Saturday and save 10 bucks a week which translates into $520 a year.
By Donna Donaldson, MSN Money
Will you be buying a lottery ticket? Do you think buying a lottery ticket is a waste of money?
Posted by: bufford | Apr 13, 2021 9:25:34 AM
Where else in the world can you win money tax free? Saving $520 a year at my age will do me no good. The only hope in hell I have is to win something. Most Canadians I know are in the same boat. Work and taxes are killing people. The only ray of hope they have to achieve financial independence isnt by putting their money into the hands of the financial giants and receiving less than 3% on their investment. So what choice is left to them, either buy a ticket or rob a bank. In either case, good luck to all of you. p.s. You might want to save your money I already have the winning ticket.
Posted by: GSJoy | Apr 13, 2021 11:23:27 AM
It would be nice to win a portion of the 50 0r 55 million dollars, but would I be any happier. I've just seen on the news that 70% of lottery winners lose it all in about 7 years. Mind you winning would make you only more financially independent, so that you do not have to worry where your next meall is coming from or how you are going to pay your bills.
Posted by: CARL FRANCHUK | Apr 13, 2021 4:43:51 PM
being on dissability and living in b.c i can't afford to buy a ticket!!!!!
Posted by: Dave (shadowdc) | Apr 13, 2021 5:08:25 PM
I,ve been buying one or the other , sometimes both or more , most of my life , i,m only 62 now , so i,m thinking ,yeah , for what i have invested all these years , that,s right they owe me a big win. If i would have put it in the bank maybe now i would have my own big win , or not . But i keep playing , yeah maybe one day before i die , or on that day .
Posted by: pete | Apr 14, 2021 11:37:54 PM
Lotteries are a tax on the Stupid.
Future value of $520 invested annually over 65 years in a TFSA at 9.9% compounded annually (that is the S&P 500 average return over the past 120 years) = $2,422,576.80
Posted by: Get Serious | Apr 15, 2021 12:15:48 AM
Why not have 5 winners of 10M+ each... or 11 winners of 5M+ each. Anyone who can't live on 5 or 10 Million (even conservatively invested) for the rest of their lives doesn't deserve 2 nickels to rub.
Posted by: BMIA | Apr 15, 2021 10:47:37 AM
It is a risk versus reward strategy, not an investment strategy. For $2 I could buy a coffee and have instant gratification and zero dollars out of it. The reward is instant gratification and the rosk is lose it all! Buy a lottery ticket and lose that instant gratification also lose it all (zero dollars left in the pocket). But the potential reward for a lifetime supply of coffees when I want it is worth the risk. Either way I lose everything ($2). But I weigh the reward of instant gratification right now against a lifetime supply of gratification.
Now, someone posted earlier about lotteries being a tax on the stupid and then proceeded to hash out some statistics based on a real stupid set of investing strategies - hypocrisy. A TFSA can only be opened when you are 18 (argument being applied to a poster who proclaimed they are 62). S&P 500 average may, in fact, bear the return being advertised. However, the first index fund was only established in 1975 - just pointing out the absurdity of comparing to a make-believe fund that didn't exist 65 years ago (TFSA is only 5 years old). And, finally, as a Canadian, there will be witholding taxes on the dividends and equity gains (when you sell) you will realize in holding a S&P 500 Index Fund. That reduces your future value. No matter how fancy someone wants to create something, as a foreigner you will be subjected to witholding fees on any American stock - which is the majority of holdings in the S&P 500. True, you aren't taxed on your gains within the TFSA, but you will be taxed on the transactions realized throughout your lifetime with the TFSA - including the fact that there will be a brokerage fee (of some sort) for the investing of $520 - assuming it is a lump sum investment and not 52 investments of $10 (which makes it even worse).
Posted by: natalie | Apr 15, 2021 11:27:12 AM
Pete: 9.9% interest on TSFA account? These days? You're kidding, right?
Posted by: rita klein | Apr 15, 2021 11:58:03 AM
I have never purchased a lottery ticket of any kind, nor do I gamble at casinos or any other such establishment. I watch where and how I spend my money, save a buck whenever I can, only buy things on special or not at all, do not use credit cards of any type tha charge interest of any kind, do not drive a car, and am not a moron and spend every dollar I make before I cash my cheque. Smart people who know what they are doing do not need to win a lottery because they are financially stable enough to get by with what they have and are happier for it. I know a few individuals who have won lotteries and inherited big sums of money and are all as miserable now as they were before they came into the big bucks. You cannot buy a brain. Money does not make anybody smarter, it only makes them richer. If someone likes to sped a few dollars buying these tickets to get a jolt out of maybe winning it big, then more power to them. But I don't spend anything unless I am getting something in return. And with lotteries, the odds are infinitaly stacked against you. No thanks. I will be a cheapskate and keep my hard earned dollars thank you.
Posted by: Chas | Apr 15, 2021 1:55:07 PM
Most of us are work /Job slaves ...So investing in Lotto tickets I think is a good thing...Because if you WIN ..WOW a life of FREEDOM ..No more slavery ..So yes BUY lotto tickets..
Posted by: Matt | Apr 15, 2021 4:15:26 PM
@BMIA- you are spouting off a lot of things to make it seem like you know a lot, when in fact most of the things you are saying are misinformed/misleading at best and completely wrong at worst. The point Pete was getting at, showing those calculations is to show what is possible NOW. If, hypothetically, you had your savings inside a TFSA, invested in the S&P, there would be no withholding tax or anything of the sort. Any growth on any investment inside a TFSA would grow COMPLETELY TAX FREE. There would be no withholding tax, capital gains, or dividend tax. I believe the reason Pete used the TFSA as an example was just to show what you would have as far as assets inside your savings account that you would have access too. If you had saved the same amount a month inside an RRSP in the S&P, you would have the same amount of cash in your savings, with the exception that it would be taxable. No one would require you to be using a brokerage which would incur the transaction fees as well. Any third party consumers advocate will tell you to stay away from an investor that gets paid to shuffle your investments around, this leads to bad/emotional investing which will cost you big time over the long term. Actually using dollar cost averaging (investing $10/week, instead of $520/year) will typically give you a better return by 1-2% (over the long term) because you are averaging out the cost of your shares.
@Natalie-no one will guarantee you 9.9% on any investment. The point is, from the time you should start saving to when you retire, there are many years to allow your investment to grow and add to it. Investments like the S&P OVER THE LONG TERM, will AVERAGE between 8-12%. This will not happen every single year, but over the long term it will happen. The biggest problem is that people are emotional and irrational and try to time the market. Very, very few people have success doing this.
@rita klein- thank you. I agree 100%. The majority of people out there, if they would be willing to deny themselves the instant gratification, get themselves even a little bit educated on how money works, would have no issues becoming financially stable.
Sorry if I have offended anyone, I needed to rant.
Posted by: BMIA | Apr 15, 2021 5:25:28 PM
Sorry Matt, your post is in error. Hypothetically or not. My invetment strategies are not hypothetical, they are very real - and I am certain I am not the only one who invests in reality and not hyptheticals. Just because you buy American Stocks in a TFSA does not mean you are not subjected to witholding taxes as a Canadian. Of course you are. Your advice is very dangerous because not only is it faulty, it is ignorant. You would have been better off saying TSX100 or something like that and stay clear, completely of American stocks and funds. But hey, perhaps in your hypothetical world Canadians are not subjected to witholding taxes by Americans.
Unless you are qualified to buy stocks with an exchange you have to use someone or some institution to buy your stocks. There may be a cost to it, there may not - depends on your institution or whom you get to conduct a trade or open an account or maintain an account. An S&P Index fund falls into the category of a fund that can be bought and sold like a stock - not sure which hypothetical S&P Index fund you are thinking about. There are witholding taxes on the dividends earned in the American funds. It happens at source as mandated in the U.S. Not sure why you feel it isn't applied just because it is in your TFSA. Assuming you have such a fund in your TFSA perhaps you should read your reports when they are sent to you - it will detail exactly the witholding at source you, as a Canadian, are subjected to, on the dividends. You may be in a fund where the dividends are automatically reinvested and not paid out as a dibursement - but the taxman will get you at some point. It is also applied when you sell your stocks (as I assume you will be doing when you retire). The danger is in mixing American and Canadian investments - which I was illustrating. Also, your claim of getting 1% - 2% better over the long term is a made up number - it's garbage. Whom are you quoting? Bogle? The person who created the very first S&P 500 Index fund you are using as an example? You have math to prove that out? Lump sum, if the option is available, is always the better option - especially over the long term. Have you tried to do the math for $65000 invested in the S&P500 65 years ago as opposed to $1000 per year over the past 65 years? You won't even be close with the $1000 per year (which by your typical example over the long term you purport to be 1% - 2% better - these are your words not mine - which are backed up by the real world, by the way).
I like my coffee once per day. I like a little bit of instant gratification in my life. Makes me happy. And if I am going to forego $2 once per week and rob me of my instant gratification on one day that week it better have a really good reward for me to forego that instant gratification.
Posted by: rita klein | Apr 15, 2021 5:41:35 PM
Thank you Matt. Actually, I have a fantastic husband who is actually smarter with money than myself. I learned a lot from him in terms of saving money and only buying what is needed and not what is going to collect dust on a shelf. We both do not even own a cell phone because they would only be a useless expense. We are not so important that we have to be in constant contact with each other or other people all day long. And he will walk a few miles to save money on groceries and pay our bills in cash and not at the bank where a fee is paid. And if people want to buy a cup of coffee every day like BMIA choses to do, that is wonderful. I would not spend hard earned money on such nonsense because, with the cost of a cup of coffee at most places, I could pay my monthly intenet bill. Go figure. What is good for me is not good for others, and that is how it should be. Without people spending money on needless instant gratificational tidbits, most businesses and fast food joints would be out of business, so thank the Lord for people like them. If everyone thought like me and my husband, nobody would be bankrupt or living from paycheck to paycheck and have headaches that they cause to themselves and credit card debt that is driving them to an early grave.. But don't listen to me. I only know what is good for me. I could really care less about what anyone else does with their money. And if I ever won a lottery, I would really not know what to do with it because material things mean nothing to me. Health and happiness and a loving family and friends are good enough for me. And by the way, I no longer have to work full time because I do not need the money. So maybe I do now something about lifestyle spending. Oh well, to each their own.
Posted by: Roger | Apr 18, 2021 10:19:37 PM
Come on everyone: My investments lost 40% two years before my job was outsourced to India, and I turned 65. Two or Four dollars is an entertainment cost. What would we do if we win? Sure, I don't think I will ever win, but I can't win without a ticket :-)