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Old 10-18-2007, 02:40 PM   #41
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I think the fallacy here is in portraying "$30/week" as a trivial amount. As I showed in my post, if you took that $30/week and invested it at 10% for the same time period (60 years), you'd be guaranteed $5.2 million.

What I'm saying is, I don't understand why you're saying a 0.0641% chance of winning the lottery is "not bad odds," when the same money could give you a virtually 100% chance of $5.2 million.
I think that hits the nail on the head. It also helps explain the talk of the middle class squeeze we hear about. $30 per week = $1,560 per year. If you took standard advice and saved 10% of your income that = $15,600 or $7.5 an hour ~ the minimum wage next year.

In 2 generations (60 years) you could take your family from minimum wage poverty to top 10% status if you invested consistently, but most people never will :confused:

You still have to find a way to live on the 90%, but most people do not remain at minimum wage forever either. I routinely see low wage people in 7-11 spending $10 per DAY on coffee, half smokes, cigarettes and lottery tickets.

You do need discipline, a horizon that extends beyond your life, and to avoid people like Kyosaki that say investing in mutual funds is for suckers but it is still very doable to change your family history in the good ole US or A.
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Old 10-18-2007, 02:42 PM   #42
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Originally Posted by kombat View Post
I think the fallacy here is in portraying "$30/week" as a trivial amount. As I showed in my post, if you took that $30/week and invested it at 10% for the same time period (60 years), you'd be guaranteed $5.2 million.

What I'm saying is, I don't understand why you're saying a 0.0641% chance of winning the lottery is "not bad odds," when the same money could give you a virtually 100% chance of $5.2 million.
I agree that the obvious method to maximize expected payouts/NPV's is to not play the lottery and invest what you would otherwise spend. My statement that 1 out of 1560 odds are pretty good only goes to counter the argument that "well, it's a 1 out of 146,000,000 chance of winning - odds so distant, there's no point in playing". When in reality, the cumulative probability of a lifetime of playing $30/wk leaves you with a significantly greater chance of winning (even though you have a negative NPV on the transaction).

Let me make it clear that I am not suggesting playing the lottery is in any way a wealth-maximizing endeavor. I only wanted to counter the perceived nearly impossible nature of winning the lottery, when in fact, played at the $30/wk level, there is a 1 out of 1560 chance of winning.

I figure when I play a $1, I have an expected payout of around $0.5 or so after taxes. The $0.50 that I'm losing is more than replaced by the excitement of the "what if" - in other words, pure entertainment value. Folks that blow $30/wk every week knowing that many weeks the jackpot is as low as $8 million lump sum baffle me. Guess they get more entertainment value out of wishing they were rich instead of actually becoming rich through saving money.
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Old 10-18-2007, 02:45 PM   #43
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Originally Posted by kombat View Post
I think the fallacy here is in portraying "$30/week" as a trivial amount. As I showed in my post, if you took that $30/week and invested it at 10% for the same time period (60 years), you'd be guaranteed $5.2 million.

What I'm saying is, I don't understand why you're saying a 0.0641% chance of winning the lottery is "not bad odds," when the same money could give you a virtually 100% chance of $5.2 million.

Heck, if you really want to play with numbers, what if we could take 60 years' worth of $30/week payments all up-front at the beginning and invest them, instead of spreading it out over 60 years? $30/week * 52 weeks/year * 60 years = $93,600. That's your total outlay. That's how much you'd spend on lottery tickets in your example in order to earn a 0.0641% shot at winning the lottery (or a virtually guaranteed $5.2 million using my plan). If you instead invested all that money at the very beginning, at 10%, then sat back and waited that 60 years, you'd have $28.5 million!

I know you will have a good amount... but you forgot the other government 'lottery' called TAXES... they get you coming and going...
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Old 10-18-2007, 03:31 PM   #44
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In terms of the OP, I think it is not the fact they play lottery, or even the amount, but that they spend so much mental energy investing in the lottery as their path to their "future."

That to me is more disturbing for many reasons.

They aren't paying attention to their reality and will likely be disappointed with their outcome - no real savings (or not enough) and no lottery.

As a caring family member, that would disturb me too. But I don't think there is anything you can do about it. They seem quite wedded to the idea and would resent you for pointing out their inadequate logic. As long as it's not quite like a gambling or other addiction where the $30/week is causing them big financial problems (other than inefficient use of that $30/week)...then you have to let it go...

like the penguins on madagascar say, "just smile and wave..."
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Old 10-18-2007, 04:04 PM   #45
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neither the fantasy nor all the math in the world means a thing. you will only win the lottery if god commands it or if you are lucky enough for blind fate to name you the chosen one. that is its grand allure. are you worthy? muhaha.
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Old 10-18-2007, 05:28 PM   #46
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I'm not a lottery player but last year I got into Hgtv's dream home frenzy .I was convinced that I'd win .I had decided I would invite all my friends and family to use the home for several months and then I'd sell it .The night they were going to surprize the winner I stayed dressed with make-up on in case it was me . Okay ,maybe that was a little nutsy but it gave my family a good laugh .
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Old 10-18-2007, 05:35 PM   #47
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I'm not a lottery player but last year I got into Hgtv's dream home frenzy .I was convinced that I'd win .I had decided I would invite all my friends and family to use the home for several months and then I'd sell it .The night they were going to surprize the winner I stayed dressed with make-up on in case it was me . Okay ,maybe that was a little nutsy but it gave my family a good laugh .
ROTFLOL!!!
If I recall correctly, something like 44 million entries were submitted to HGTV for the latest Dream Home sweepstakes...including two from me!
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Old 10-18-2007, 07:01 PM   #48
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Tax on the stupid or not, I like the lottery and will continue to play. And when I win, you guys aren't getting any of it :P
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Old 10-18-2007, 07:05 PM   #49
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Tax on the stupid or not, I like the lottery and will continue to play. And when I win, you guys aren't getting any of it :P
Yeah... what's 4% of $150 million again?
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Old 10-18-2007, 07:22 PM   #50
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Tax on the stupid or not, I like the lottery and will continue to play. And when I win, you guys aren't getting any of it :P
You tell them! Remember, NinjaPigeon, I'm your only true friend here. What will we do with the money?
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Old 10-18-2007, 07:27 PM   #51
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I prefer "Tax on the mathematically challenged."

But there's a whole 'nother level to this: the people who buy software to predict what numbers will come up; which numbers are "hot" and which are "due."
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Old 10-18-2007, 08:04 PM   #52
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I don't know what says more: The fact that they spend $30 a week on lottery tickets or the fact that someone was bothered enough by this to post it on a message board asking for "help" to get them to stop.
Bravo, you're better than me, take a bow.
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Old 10-18-2007, 08:38 PM   #53
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My frugal retired relatives have always lived below their means (and continue to live waaaay below them in retirement). They would never spend $10 on a ticket to see a first run movie and they know every early-bird dinner special in their state. If you saw them in a convenience store you would be looking at the millionaire next door but you might easily mistake them for someone using up their food budget instead of a retired bank president. They do play the lottery every week, the same numbers year after year, and horror of horrors, even indulge in the occasional scratchoff! I really don't see how they are hurting anyone doing something they enjoy. (They also like the nickel slots and have no problem walking away from a hot machine after it coughs up $15 or so.)
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Old 10-18-2007, 08:53 PM   #54
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To the OP...

I am sure that YOU do things that upset the inlaws / relatives... and they probably talk about it behind your back..

I don't drink coffee, and can not for the life of me see someone buying $20 to $50 a week on drinking coffee as rational... yes, he gets his 'fix', but it seems your inlaws are getting their 'fix' also... it is harmless fun if they can afford it... just put it under entertainment....
If anyone thinks that nobody talks about them behind their back, they're kidding themself. My inlaws can spend all they want on lottery tickets. How they get their fix is not a concern. In using your example, what if the family member buying all of that coffee managed to steer 3 or 4 of your conversations every day toward the topic of coffee? I expect that it might wear on you a bit.
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Old 10-18-2007, 11:37 PM   #55
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If anyone thinks that nobody talks about them behind their back, they're kidding themself. My inlaws can spend all they want on lottery tickets. How they get their fix is not a concern. In using your example, what if the family member buying all of that coffee managed to steer 3 or 4 of your conversations every day toward the topic of coffee? I expect that it might wear on you a bit.
I would just ignore them and go watch the game or do something else... I think they would get the message after awhile...

Also, I would not be answering them, so the conversation would dry up unless it was between themselves...and again, I am watching the game by then..
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Old 10-19-2007, 02:15 PM   #56
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If I had the money to bet the trends absolutely.
Trends in random numbers?? Are you on crack?

This falls right into the bucket with the people who see "hot" poker tables, "hot" shooters in craps, etc. It is all random, but people love to pretend that there is sense to it all.

Random = random = random. There are no trends on the roulette table. If it has hit 10 red in a row, the chances are still 50% red, 50% black for the next number. That's it.

Now if you want to talk about the stock market, there are plenty of arguments for & against trends. At least there you're not dealing with randomness, you're dealing with things affected by humans.

But sorry, seeing trends in random numbers is not sane behavior.
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Old 10-19-2007, 02:20 PM   #57
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But sorry, seeing trends in random numbers is not sane behavior.
Maybe not sane, but for me it has been very profitable.
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Old 10-19-2007, 02:21 PM   #58
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You would be surprised how bad I am when it comes to picking stocks and dreaming and talking about winning. I have about 30 different mutual funds I picked out 14 in 2 days once just divided the money between all the ones I was considering and couldn't decide.
Just a slight quibble about your strangeness

If I was to buy large numbers of speculative investments (which I do understand some of the appeal), I would not aim for mutual funds. If you own 30 different mutual funds, you may as well just put all your money into the "complete stock market index", and leave it there.

In my opinion, if you're going to speculate (also known as gamble), you may as well aim for individual stocks. I do have a few individual stocks (merely for entertainment purposes), and it is fun to watch for them in the news reports. Great fun to have an up day, and I try to forget the down days
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Old 10-19-2007, 02:23 PM   #59
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Maybe not sane, but for me it has been very profitable.
I could say I see trends in flipping coins, because I just got 10 in a row. No one can refute that I see trends, other than the fact that I'm simply wrong.

You may or may not think you are seeing trends, and you may or may not have a profit. In reality there are no trends, and over an infinite amount of time, you would lose if you continued to gamble at a losing game.
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Old 10-19-2007, 03:19 PM   #60
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Maybe not sane, but for me it has been very profitable.

You sound like my BIL... just because you got lucky does not make it 'smart' or 'right'.... but he seems to think so and so (it appears) do you..

funny thing is if you press him, he agrees it is random, but then will talk about being 'hot' etc.... just does not get it.
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