The offer is often too tempting to pass up…

[ad#Google Adsense 336×280-IA]A simple $1 bet can be transformed into hundreds of millions of dollars.

It’s a game that Americans can’t get enough of.

And our collective appetite for it is growing.

Since 2002, the amount of money Americans spend on lottery tickets each year has increased 65.5%.

In 2014, it topped $70 billion.

What’s even more astounding…

The amount Americans threw away on lottery tickets was $7.4 billion more than what was spent on all other forms of entertainment combined.

The worst part? The lottery preys on those who struggle most.

In fact, research shows the poorer the American, the more they spend on lottery tickets. A lot more.

Americans who make $20,000 or less per year spend an average of $550 on lottery tickets per year.

That’s twice as much as any other income bracket.

Studies going back to the 1980s have shown that the poorest third of all U.S. households purchase half of all lottery tickets.

But the real devious part is this: States take 40% of every lottery ticket as revenue.

A 2009 study showed that in 11 states, lottery ticket sales brought in more revenue than corporate income taxes.

In 2014, lotteries contributed $21.3 billion to state budgets.

The government has a vested interest in selling Americans lottery tickets.

Not to mention the fact that any individual who wins $600 or more from a lottery is taxed 45% on that windfall.

The government wins on both sides while Americans lose.

The fact is that the lottery is a government tax disguised as a game of chance – one that Americans willingly pay more than $70 billion a year into.

And the odds of winning have steadily gotten worse. Since its inception in 1992, the Powerball lottery has reformulated the odds six times to make it harder to win. Originally, the odds of winning the Powerball jackpot were 1 in 55 million. Today, they’re 1 in 292 million.

That means, over the past 25 years, the probability of making money in the lottery has declined 81.2%.

The piece of this that troubles me most is 60% of all Americans buy a lottery ticket at least once per year…

But more than half of all Americans have zero dollars in stocks.

The biggest misconception people have about the stock market is that owning shares of a company is like buying a lottery ticket… that it’s either going to pay off big or they’re going to lose everything.

This is one of the dumbest and most dangerous beliefs to have. And it couldn’t be further from the truth.

When you own shares of a company, you’re taking a stake in a business.

The company may succeed, or it may fail. Those are the risks. But inevitably, if a business does well, shares will eventually follow.

And if a business fails, there’s no obligation to hold shares down to zero. You can sell at any time, taking a gain or suffering a loss.

We’re not randomly scratching off squares with a quarter, hoping for three of a kind. We’re not using our dog’s birthday to choose stocks.

We’re doing research.

We know what companies are seeing their revenues and earnings increase at rates above those of their peers. We can follow trends. We can buy at lows and sell at highs.

All of this increases our odds of success.

And an investor’s probability of success increases the longer they stay invested…

If you buy the S&P 500 and hold it for one day, you have a 54% chance of making money. The longer you hold it, the better your chances are of turning a profit. After 10 years, there’s a 94% chance you’ve made money. And at 20 years, there’s a 100% guarantee you’ve made money on your investment.

I’ll take those odds any day.

The worst performance of the S&P 500 over a 20-year period is 7% per year. And that was the 20-year period that ended in February 2009. The best is 18% per year, with those 20 years ending in March 2000.

Truth is, Americans will never get ahead thinking that the lottery is going to turn them into a thriver.

It won’t.

The best bet to beat the curse of mediocrity is investing.

If you invest in the right companies, your probability of success is extremely high. And as time goes on, an investor’s wealth increases, as does their probability of success.

That’s not a game of chance.

That’s as close to a sure thing as there is.

Good investing,

Matthew

[ad#agora]

Source: Investment U