Lottery or Stock Market : Make your choice !

At the 4th of July, I read an interesting blog post of PIERRE HUYLENBROECK with the title “Become incredible RICH” on the Beleggersgids website.

Pierre Huylenbroeck is the author of “Everyone investor’ and the publisher of Mister Market Magazine. (URL : www.mistermarket.be) He also wrote 4 books ‘De Reuzen van de Beurs’ (2000), ’40 Meesterwerken uit de Financiële Geschiedenis’ (2006), ‘100 Essentiële Wijsheden over Beurs en Beleggen’ (2010) and ‘Iedereen belegger’ (2015).

What would you do with €100.000.000? How do you grow your money? How do you want to become incredible rich? How do you want to become a millionaire ?

Today the Belgian Nationale Loterij does EVERY EFFORT to seduce people to buy lottery tickets every week. It is obvious that the lottery is a continuous source of income for the Belgian government. In this blogpost I reflect what is a better choice for your money…

Option 1 : The Lottery

In 2017 already 16 millionaires…are you one of them ?

Every week I see a new trailer or I hear a radio trailer to buy a lottery ticket. Every time they make it more tempting…it could be YOU WINNING the jackpot ! Really ?

The lottery is aimed to be a “GET QUICK RICH” game. You spend 2, 5 or more $ or Euros to buy a ticket. in Belgium you can play twice a week. You can also play Euromillions and buy get quick money scrambling cards.

Recently I read that the new “company” strategy of the Lottery is to convince you to buy more (different) Lottery products…

Option 2 : The Stock Market

Many investors consider the stock market a gambling game, sometimes I hear the word “casino”. How do I know which stocks to buy? Can I rely on my banker for advice ? Can I lose all my money when I invest in the stock market?

If you are a beginner investor, you need to be aware of the Investor Psychology Cycle. Emotions play a big role in investing in the stock market. That’s why algorythms and computers are executing the majority of the transactions. The “little” investor easily falls in the trap of buying high and selling low due to emotional investing.

If you invest in the stock market, you need to invest in your knowledge first. You don’t simply follow other investors’ advice on what to buy. There are several “rules” of the game that you may want to follow when investing in the stock market. There are several investing strategies you can also apply while investing in the stock market.

Our Opinion

What Americans spent on the lotto in 2014

(source: NASPL sales data)

So…let’s get back to the blog post of Pierre H. A government advertising the lottery is simply shameful politics. Who is buying those lottery tickets ? The smart investor? The blue collar worker? The intelligent manager?

In 2014, Americans spent $70 billion on the lottery. That’s over $630 for every household in the U.S.! It sounds absurd.

Voltaire would have said ‘The lottery is tax on stupidity’! This is not totally correct as it is more a tax on despair and loneliness. People buying lottery tickets are not the stock market investors, nor the rich people but mostly people who are lonely or with a low income. This is also confirmed by data in the USA. Low income people adjust their spending to buy a lottery ticket. People who hope to be lucky to win ONCE the jackpot that can change their life. Instead they are paying a little amount every week which is guaranteed lost. The chance of winning is 0,0000123 percent.

I did a small comparison based on my own knowledge between the lottery and the stock market as some people say that investing in the stock market is gambling. So let’s do the comparison. If you invest 2 to 5 euro per week, you spend between 208 to 500 euro per year. If you save 25 to 50 euro per month in a fund saving plan, you invest between 300 to 600 euro per year. very comparable numbers, right?

Your chance on winning is listed in the table. In the stock market you can gain on average 6% or higher. Your chance of losing all your money in a fund saving plan is close to 0%. You don’t invest all your money in 1 company, right?

For playing the lottery, you don’t need to control any emotions. For the stock market neither according to me, but with market corrections or crashes people always get nervous and think they need to sell everything….

Playing the lottery is definitely gambling, rather than investing. If you do not win a prize, you lose your money.

That’s why I believe it’s a voluntary form of taxation. People willingly hand over their hard earned cash in the microscopic hope of a big win. Whether they do this because they are stupid, can’t do maths, are dreamers, or just want a bit of fun, it all boils down to the simple fact that it’s a waste of money. But hope of a big win makes people irrational. They think: “It’s only a couple of pounds/dollars/euros, let’s go for it.”

But if they read this blogpost and think about the actual probability of winning, maybe they would save that cash and invest it instead in the stock market. If you invest 500 euro each year in the lottery, you have lost after 10 years 5000 euro as your chance on winning is close to zero…if you invest 5.000 euro in the stock market, you can get an 6 to 8% average return per year on your money making your money grow ! The key to success in the stock market is investing consistently and disciplined.

According to Pierre Huylenbroeck the stock market is the source of hope, involvement and prosperity. The lottery is promoted by government, investing in the stock is still boycotted, and that by our own political leaders. Pierre gets very angry about this stupidity of Belgian politicians and so do I !

Thanks for reading this blog post ! Are you investing in the lottery or in the stock market ? Make a wise choice !

Don’t hesitate to leave your comments and feedback.

Good luck with your investment strategy ! The lottery is not an investment strategy…

Source : De Beleggersgids , Metrocosm

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Lottery or Stock Market : Make your choice !