Forget the National Lottery! This could be an easier way to get rich
Since its launch in 1994, the National Lottery has become a huge part of British culture. For almost 25 years now, people all across the country have bought tickets week in, week out, in the hope of winning the huge jackpot. As a nation, we’re hooked.
A look at just how many people play the National Lottery reveals some remarkable statistics. For example, according to Lottoland, a staggering 70% of people over the age of 18 take part in the National Lottery on a regular basis. Moreover, at least 50% of the overall population take part more than once a month and, on average, they buy a minimum of three tickets each week.
The opportunity to win big
It’s easy to understand why people like to play the National Lottery. With many Britons struggling to make ends meet, the chance to win the jackpot of £2m or more from a £2 ticket seems like a good deal. Essentially, it allows people to dream about the amazing lifestyle they could live if they did win big.
However, while the risk-reward payoff of the National Lottery appears attractive, it’s important to understand that the odds of winning a major prize are incredibly low. According to the Lotto website, the chance of winning the National Lottery jackpot is 1 in 45,057,474 (to put that number into perspective – Spain’s population is around 45m), while the odds of getting five numbers plus the bonus ball are 1 in 7,509,579. In other words, the odds are very much stacked against you. As such, continually buying National Lottery tickets in the hope of winning a huge cash prize probably isn’t the best investment strategy in the long run.
An easier way to get rich
An easier way to get wealthy, in my view, is through investing in shares. Shares won’t make you rich overnight. Yet, with the stock market generally returning around 7-10% per year on average over the long run, it’s certainly possible to generate life-changing wealth over the long term.
Anyone can invest
The best bit about investing in shares is that it’s very easy to get started these days. As I explained here, you don’t need to have a huge amount of money set aside, or be earning a big salary to invest. For instance, through Hargreaves Lansdown – the UK’s largest investment provider – you can put your money into an investment fund with as little as £100. You can also set up a monthly direct debit for as little as £25, which equates to around £5.77 per week – less than the price of three National Lottery tickets.
You’d be surprised just how quickly a small investment like this could grow. For example, assuming a growth rate of 8% per year, an initial investment of £100, and a £25 monthly top-up, could grow to around £2,000 after just five years, according to my calculations. Boost your initial investment to £1,000, and your monthly contribution to £50, your money could grow to over £5,000 in five years. The longer you invest for, the more your wealth is likely to grow.
Ultimately, the choice between spending money on National Lottery tickets and investing regularly in the stock market is a no-brainer, in my view. The former offers very low odds of netting a good return, while the latter has proven to be an excellent way of generating wealth over the long term.
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Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.