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Forbes: Tonight's $312M Mega Millions lottery is a sound investment

Mar 25, 2011, 7:47 pm

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Editorial / OpinionEditorial / Opinion: Forbes: Tonight's $312M Mega Millions lottery is a sound investment

Editor's Note: Tonight's $312 million Mega Millions drawing takes place at 11:00 pm Eastern Time (8:00 pm Pacific Time).  The winning numbers will be published at USA Mega (www.usamega.com) and at Lottery Post's Lottery Results page.

Playing the lottery is a fool's errand. Everyone knows it's a losing gamble, that the house wins and that, especially as jackpots increase, the odds of winning are slightly lower than the odds of getting struck by lightning — twice. (Just ask this guy.) In tonight's MegaMillions drawing, for example, a $1 ticket buys you a one in 175,711,536 chance of winning the $312 million jackpot.

But Allan Roth, founder of Wealth Logic, says that dollar can be money well spent. In a January column on CBS's MoneyWatch blog, he wrote:

I'm also buying [a MegaMillions ticket] because it helps me to keep my investing dull. Buying broad index funds and rebalancing over time is definitely the path to reaching my financial goals, but not the path to filthy richdom. So this $1 investment gives me a delusional hope for riches that my core portfolio could never give me.

Put another way, use cheap entertainment-style risk outside of your portfolio — with no expectation of winning — and stick to the fundamentals in the market. We hardly bat an eyelash at spending $10 on a ticket to a two hour movie; why not spend a dollar and savor a couple of hours imagining yourself swimming in a pool of gold coins or jet-setting around the world?

Even Jack Bogle, godfather of the index fund and founder of Vanguard, would likely agree that finding ways to isolate your emotions from your portfolio is worth a dollar every couple of months. When he sat down with Steve Forbes last year, Bogle talked about avoiding impulsive choices in portfolio management in search of higher returns.

"Emotions are your enemy, and you've got to find ways to get around your emotions or you're going to get killed," he told Forbes.

Of course, like any risky investment, it's unwise to throw too much money towards lotto tickets. Since buying more tickets barely registers an increase in your odds, it's probably not worth more than a buck.

When I spoke to Bogle, he advocated for another form of controlling emotional investing:

I believe strongly that some kind of asset allocation–some kind of anchor to windward or dry powder, if you will–is a very important thing for investors to have. So it's buying and holding a stock portfolio and a bond portfolio. Or a balanced portfolio, if they're combined in one.

That has an uncertain effect on returns. It's obviously very helpful in bad markets and is a drag in good markets.

But the beauty of it is that it reduces your impulsive behavior. If the fluctuations in your investment portfolio are reduced, the impact of emotions and behavior on your account is also reduced.

Whatever strategy you use to control those impulsive actions — so long as it's cheap — is a worthwhile endeavor. I've never bought a lottery ticket before, but maybe tonight's my lucky night. If a dollar spent on a daydream saves thousands lost on a risky stock, then it's a good investment indeed.


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7 comments. Last comment 9 years ago by Prosperous1.
Page 1 of 1
mightwin's avatar - questns

United States
Member #103782
January 5, 2011
486 Posts
Posted: March 25, 2011, 7:54 pm - IP Logged

We all play for the chance for financial freedom

    barbos's avatar - gold bar-and-cash1.jpg
    United States
    Member #23907
    October 17, 2005
    122 Posts
    Posted: March 25, 2011, 10:11 pm - IP Logged

         I haven't seen anyone today buying a $1 ticket. Guess nobody is reading Forbes.

      fwlawrence's avatar - Yavill
      United States
      Member #9378
      December 6, 2004
      221 Posts
      Posted: March 26, 2011, 12:17 am - IP Logged

      Well, I didn't get a single number. So much for my investment!

        fwlawrence's avatar - Yavill
        United States
        Member #9378
        December 6, 2004
        221 Posts
        Posted: March 26, 2011, 2:54 am - IP Logged

        Well, I didn't get a single number. So much for my investment!

        At least it was a good investment for one winner in New York.

          New Jersey
          United States
          Member #77099
          July 13, 2009
          7805 Posts
          Posted: March 26, 2011, 7:09 am - IP Logged

          Congratulations to the Jackpot winner and the 32 second place winnersHurray!

          Just heard the winning ticket was sold in Upstate New York - Albany @ Coulson's News Center.

          Whoever said money can't buy happiness simply didn't know where to go shopping

            savagegoose's avatar - ProfilePho
            adelaide sa
            Member #37135
            April 11, 2006
            3339 Posts
            Posted: March 26, 2011, 7:14 am - IP Logged

            I  scored the mega numberd a cool $2

            " Still swinging, still missing "
            2014 = -1016; 2015= -1409; 2016  = -1171; 2017 = -1257 ; 2018 = - 1380 =  TOT =  - 6233

            keno historic = -2291 ; 2015= -603; 2016= -424; 2017 =-427; 2018= -223   TOT = -3968


              Prosperous1's avatar - Lottery-062.jpg
              New Member
              United States
              Member #81033
              October 9, 2009
              31 Posts
              Posted: March 26, 2011, 6:15 pm - IP Logged

              I won a freebie from last nite's GA Lottery Fantasy 5 drawing.Hurray! We are having a promo until June--Every Friday buy 1 Fantasy 5, get one FREE! I am on it doggone it every Friday!Coffee

              "Never make someone your priority, while they make you an option."