To put this into perspective, if the same person invested that $97/mo. into the market at an annual rate of 10%, that would be equivelant to $700,000 over a 40 year period with only $47K invested. Instead, that's $47K that 99% of people will be throwing away. http://www.theatlantic.com/business...-9-of-their-income-on-lottery-tickets/255304/ Mar 31 2012, 11:52 AM ET56 The Mega Millions jackpot makes this the week to talk about lottery economics, so here's a whopper: Households earning less than $13,000 a year spend a shocking 9% of their money on lottery tickets, Henry Blodget relays from a PBS report.* Are they clueless? Are they desperate? Are they economical? Maybe, probably, and possibly. For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you'll need in the future, you pay a small sum of money in exchange for the small probability that you'll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance. As it turns out, the typical U.S. family spending spends nearly the same share of its money -- 10.8% -- on insurance and pensions, including mandatory insurance programs like Social Security. The poorest working families also pay Social Security. But approximately 10% of households, most of them in the bottom decline, pay net zero federal taxes (including Social Security) due to tax credits in federal income tax code that bring their total federal burden past zero.
Over the LONG term some good long track mutual funds average around 10% rate of return. Fundamental Investors (growth-and-income fund) Class A shares Fund Number 10 Ticker/Quotron Symbol ANCFX Newspaper Abbreviation FdInvA CUSIP Number 360802 10 2 Fund Inception August 1, 1978 Fund Lifetime Rate of Return: 12.52% The Growth Fund of America® (growth fund) Class A shares Fund Number 05 Ticker/Quotron Symbol AGTHX Newspaper Abbreviation GwthA CUSIP Number 399874 10 6 Fund Inception December 1, 1973 Fund Lifetime Rate of Return: 13.79% The Investment Company of America® (growth-and-income fund) Class A shares Fund Number 04 Ticker/Quotron Symbol AIVSX Newspaper Abbreviation ICAA CUSIP Number 461308 10 8 Fund Inception January 1, 1934 Fund Lifetime Rate of Return: 12.18% New Perspective Fund® (growth fund) Class A shares Fund Number 07 Ticker/Quotron Symbol ANWPX Newspaper Abbreviation N PerA CUSIP Number 648018 10 9 Fund Inception March 13, 1973 Fund Lifetime Rate of Return: 12.65%
How about the stock market? It's been at least that over its history. Even with historic crashes like 1929, 1987, 2000, & 2008 it's averaged that over the long run. Heck, we're only 1000 points from where we were in 2007 before the wall street crash.
It's pretty simple to gain access to financial markets (especially if you're spending $1300/yr. on lottery tickets). There are many funds with a minimum buy in of only $1000. It's all a matter of priorities.
I can say for all my neighbors and family to claim that they're so poor they sure do spend a lot of money on lottery tickets and going to the casino. So somethin about that is right or somethin is being kept from me
Trust me my man, it's not that simple. Some of you need to widen your perspective, put yourself in other peoples shoes.
@ thinking the market is for the 99%. They sadly get used. Just because the overall market looks to be back to comparable pre-08 levels does not mean that everyone recovered their losses. Money gets shifted from sector to sector.
More info? For me, it was as easy as opening an online brokerage account, importing some information, clicking some buttons and BAM, I was invested.
It's not hard to use your gambling money to put in a long term investment cache. Stop creating so many excuses for the "poorest" households.. Hell, I consider myself poor and I have a brokerage account. Yeah it may take a few years to familiarize yourself with how the market works and where to put your money... but spare me. Stop gambling and think long term.
Lotto really is basically throwing your money in a trash can. People have this thing with "short-cuts" and don't have enough faith in building something with patience.
you can invest 1g but you have to pay commission, so just like that ur already in the red. economies of scale always goes against the poorer folks and more favorable to the wealthier who buys securities at a bulk the market is not like a swear jar where u just put money in also there is a substantial difference between paying 1g straight up and whatever chump change they spend on the lottery weekly and it is simple to have access to the financial markets...if they know how to that is, information is not always available for everybody you think if people were financial savvy they would be spending that much on the lottery...if those numbers are even real which i doubt
Not everyone is educated or wants to educate themselves. Lets face it. Some people look for the easy dollar. The majority of those people are poor. If you already have money you won't think about gambling on regular basis with dreams of winning. Most rich people gamble for the thrill. Poor people gamble for the prize.
While you seem to know what youre talking about, you really do lack perspective. Education and financial status usually go hand in hand. It was easy for you cause you have an education.
UTVol, good point, some mutual funds do offer pretty good returns over the long term, but you have to consider transaction costs, expenses, front-load, back-load, taxes, and inflation. Also a lot of these funds that show up in today's databases are also subject to survivorship bias. Only the funds that survive are listed, subjecting the average returns of these funds to an upward bias. But yeah, mutual funds def should be considered for your average joe's portfolio.
Commissions on many funds aren't that substantial. No load funds with online brokerages require about a $10 upfront fee with no load paid until you sell the fund. That's a pretty good tradeoff to me. Plus, it doesn't really matter how much you make/lose in the first day/week/month. If you stick with it for the long run you'll more often than not come out in the black. This last decade was the first time in HISTORY that the American stock market has had a net loss over a 10 year history. Unless something drastic like the housing market happens again, I don't foresee that happening any time soon since there are very few other arenas that could take down the economy like housing. Most "poor" people should also have the same access to most of the information that many middle class people have as long as they have internet access. Morning Star, Yahoo Finance, & Fool.com are all great sources for free information. Like Patrick Bateman said, it's often an issue of people not wanting to learn or change their bad habits. Rather, it's easier to complain and blame a person's struggles on someone else.