Not a smart move, obviously
Many low-income Americans think the lottery offers the most practical way for them to become wealthy, according to a new survey released Monday. Not surprisingly, financial planners think otherwise, believing it’s easier to accumulate personal wealth through investing than most think is possible.
The survey, conducted this summer on behalf of the Consumer Federation of America and the Financial Planning Association, compared views of more than 1, 000 Americans and 360 financial planners.
It found fewer than half of Americans know their net personal financial wealth, or that it is calculated by adding financial assets, plus home equity and other tangible assets, and subtracting debts.
“Americans should be as aware of their net wealth as their physical weight,” Consumer Federation of America Executive Director Stephen Brobeck said in a statement announcing the survey results.
He said knowing their net worth will help consumers make sensible decisions on spending and saving, and recommended using the online “personal wealth estimator” at www.AmericaSaves.org.
Planners typically think most young Americans could accumulate $250,000 of net wealth over 30 years and estimate about half could amass $1 million over the same period. Individuals are much more pessimistic on that score. Just 26 percent of those questioned think they could save $200,000 and only 9 percent believe they could accumulate $1 million.
“Planners know that it is easier for individuals to build personal wealth than they realize,” Financial Planning Association Chair James Barnash told Dow Jones this week.
Planners agree participating in 401(k)s and other work-based savings programs, investing in stocks and bonds, and owning a home are all excellent ways to amass wealth. Individuals, meanwhile, place more importance than planners do on winning the lottery, inheriting money, or getting a large insurance settlement.
A surprisingly high percentage of Americans, about one in five, view the lottery as their most practical route to wealth, the survey revealed. Less affluent Americans are even more convinced of that idea; the survey found 38 percent of those with an annual income of less than $25,000 identify winning the lottery as the most practical way for them to amass several hundred thousand dollars. The results have a margin of error of plus or minus three percentage points.
Powerball odds
In case you are considering weekly Powerball ticket purchases as a way of finding riches, these are the mathematical odds against you:
Match the jackpot number of five white balls and the Powerball: (Payout varies): One chance in 146,107,962.
Match all 5 white balls but not the Powerball (Payout = $200,000): One chance in 3,563,608.83
Match 4 out of 5 white balls and match the Powerball (Payout = $10,000): One chance in 584,431.85.
Match 4 out of 5 white balls but not match the Powerball (Payout = $100): One chance in 14,254.44.
Match 3 out of 5 white balls but not match the Powerball (Payout = $7): One chance in 290.91
Match 2 out of 5 white balls and match the Powerball (Payout = $7): One chance in 745.45.
Match 1 out of 5 white balls and match the Powerball (Payout = $4): One chance in 126.88.
Match 0 out of 5 white balls and match the Powerball (Payout = $3): One chance in 68.96.
Your probability of winning something, if all the ways you can win something are added, is one chance in 36.61. The odds of someone throwing a seven with a pair of dice on a roll are one in 36. Thus, a financial plan should in no way involve a lottery ticket strategy.