It's amazing how many people in the world are looking for "easy" money that is actually much harder to obtain than legitimate money. For example, the odds of winning more than $1 million in any lottery in the US are nearly always less than 1 in 10 million. By contrast, the odds of a US adult becoming a newly minted millionaire in a given year are about 1 in 420 [1]. While the idea of living by your wits alone seems to appeal to many people, the reality is that for most people "easy" money comes from work, entrepreneurship (in many cases), and investing wisely.
[1] According to http://money.cnn.com/2014/03/14/news/economy/us-millionaires... more than 600,000 new millionaires were minted in the US in 2013, out of an adult population (age 18+) of roughly 250 million. Thus 1 in 417 US adults became a new millionaire in 2013. The odds are actually much better than this among people actively trying to become millionaires, because most US adults are not engaging in activities that could possibly position them to achieve this.
Aggregate odds are not individual odds. About one in three of my meals are breakfast, but the odds of my next meal being breakfast are incredibly low.
If you want to convince someone that a lottery is a bad bet, you have to convince them that working and investing is a better investment for them: it's irrelevant that it's a better investment for the public as a whole. And the people who market lotteries know that, and choose who they target based on that. You'll see more ads for lotteries on the subway than you will in an in-flight magazine.
> Aggregate odds are not individual odds. About one in three of my meals are breakfast, but the odds of my next meal being breakfast are incredibly low.
If you want to convince someone that a lottery is a bad bet, you have to convince them that working and investing is a better investment for them
Odds are odds. And I think that if people understood that they are at least 24,000 times more likely to become a millionaire by starting a business than they are by playing the lottery, they would start a business instead of playing the lottery.
I think parent's point, though, is that for many people the odds of becoming a millionaire starting a business are effectively zero. Their odds are actually greater with the lottery.
Also, starting a business is a lot of work, whereas buying a lottery ticket costs you maybe $2, so their expected ROI from the lottery is considerably higher.
Of course, that just means neither one is a good investment, but what you're really buying with a lottery ticket is the fun of imagining what you would do if you win, which isn't necessarily a bad deal for the price.
and you're infinitely more likely to become a millionaire by writing code than by writing HN comments. Everybody reading this should bugger off and do something useful! :)
I am not going to become a millionaire anytime soon writing code for my employer at my rate while I might have a chance getting some inspiration through all these comments and jotting out some thoughts to push me to finally pull the trigger.
Yup, absolutely. With a $5 investment in a lottery ticket, I can get one-in-tiny odds of becoming a millionaire in the next year as a result. With a $5 investment in starting a business, I can get absolutely, unequivocally, zero odds of becoming a millionaire in the next year as a result. If all you have to invest is $5, the lottery ticket is, sadly, a better investment.
True. And certainly buying more than one ticket for a given draw makes very little sense. One ticket gives you basically all the enjoyment of knowing you might win, which has value even aside from the fact that you might actually win. Beyond that though, all you're doing is spending money with negative expectation.
I always buy two tickets, because I like doubling my odds. Beyond that I don't see the point. And I don't buy until the jackpot becomes larger than the overall odds, making the expected payout somewhere in the neighborhood of 1:1.
> With a $5 investment in starting a business, I can get absolutely, unequivocally, zero odds of becoming a millionaire in the next year as a result.
That isn't necessarily the case if you're resourceful. Someone can teach themselves to code, register a domain for 99 cents, get a Microsoft BizSpark account and have a free server for 3 years, etc. If you want to write apps you're at $125 ($99 for an Apple Developer account and $25 for a Google Play developer account) but that is still far less than most lottery players spend on the lottery each year.
Time is money, as the saying goes. You've still invested a lot more than $5. (I'm not saying it's a bad investment by any means, but there is an opportunity cost.)
I would venture that a large fraction of lottery players have a day job and a family to provide for. To participate in the lottery on top of that schedule takes them maybe an additional minute or two each day. To write apps and become a millionaire takes well over a minute or two. In order to do that, they'd have to give up their ability to provide for or spend time with their family, at least temporarily.
So while not winning in the lottery might seem like a bad outcome, in fact you've avoided an even worse one. Which confoundingly means rational winnings maximization strategies (such as picking less commonly chosen numbers to reduce the odds of sharing a prize) in fact make the expected outcome of lottery playing even worse.
That report does not say how those people became millionaires. You seem to be assuming that those 600,000 millionaires became so due to working, but that figure must include people whose property value increased, inherited money, had legal payouts, or indeed won money through gambling.
Even if we assume most of those did become millionaires through "hard work", you can't say that becoming a millionaire is just down to the odds. If you already have $900,000 then your odds of becoming a millionaire next year are vastly greater than if you have $5.
Indeed. The odds of becoming a millionaire via ANY method are by definition better than the odds of becoming a millionaire by winning the lottery, since the latter is included in the former. The meaningful statistic would be obtianed by breaking down the new millionaires into categories by method of enrichment, and determining the odds of each method.
This. On paper I'm "wealthy," mostly because of how my home has appreciated. That's very, very different than someone who has 1m in the bank as cash or sitting in investments. Selling the house isn't an option, as this is where we live, raise our kids, etc.
Most middle-class retirees are millionaires now, considering inflation and property values, not to mention how much someone with even a modest salary can squirrel away over 40 years in savings and retirement funds. The metric the parent poster used is very misleading. Personally, I don't consider someone a proper millionaire unless that value is separated from the "need to live" stuff like a house or car or retirement fund.
I think getting rich like this is pretty darn rare. I don't belittle the "gambler's approach" or the crazy business idea approach. I've seen others win before with things I considered stupid or super risky. Life is funny that way. The guys who "made it" all remind me of Michael. They just didn't screw up step 2 - go low risk after the first big win.
The problem is that, while the seconds odds are better, you need skill, time, effort, luck and, in most cases, you will have to spend more money than in a lottery (be either for investments, or studies).
The lottery odds, while a lot smaller, requires you only to invest a couple of bucks each week and to remember to check if you won.
Also there is not a formula that you can follow that will guaranteed you to become a millionaire from work/enterpreneurship and investments, while the formula for lottery winner it's quite easy. Buy a ticket.
And I would love to see the chance to make $1e6 dollars per economic quintile.
I have a gut feeling that those in the bottom 40% income brackets have a much, much lower chance of making $1e6. I'm guessing that it is probably closer to that of winning the lottery.
I would like to see the numbers/proof though, to see if my hypothesis is correct.
[1] According to http://money.cnn.com/2014/03/14/news/economy/us-millionaires... more than 600,000 new millionaires were minted in the US in 2013, out of an adult population (age 18+) of roughly 250 million. Thus 1 in 417 US adults became a new millionaire in 2013. The odds are actually much better than this among people actively trying to become millionaires, because most US adults are not engaging in activities that could possibly position them to achieve this.