Tortoises Needed

Richard Quinn

I HAVE A FRIVOLOUS routine. I buy $40 in lottery tickets on the first day of each month. Many years ago, this was part of my retirement plan—the years when I was young and foolish, or maybe just foolish.

For as long as I can recall, I’ve had a premonition of receiving $14 million, either from a long-lost relative or from the lottery. Time is running out, however. That relative appears to have forgotten about me. Meanwhile, I’ve given up on the big lottery prize and would happily settle for a modest $5 million.

Maybe it’s a good thing I maxed out my 401(k).

My controlled addiction to a fast lottery buck is hardly unique. Still, I find it fascinating that many people will play the lottery in search of easy money, but fail to invest prudently for fear of losing money in the stock market. When I “invest” that $40 each month, I know I’m virtually guaranteed to lose it.

“According to Bloomberg research, the average lottery player in America loses roughly $0.40 for every $1 in tickets purchased,” opines a writer for the Motley Fool. “Talk about a bad return on investment.”

If you divide total spending on lottery tickets by the U.S. population, you get an average spend of $207 per capita. But it varies by state. Massachusetts is the highest at $735 per capita.

About half of adults play the lottery, including 40% of those earning less than $36,000 per year. Nationwide, people who make less than $10,000 spend an average $597 on lottery tickets, equal to 6% of income. That’s hard to believe. These gamblers are among the people we assume to have no money to save and invest. It seems the allure of quick wealth overpowers our ability to weigh risk against reward. It also highlights our fondness for instant gratification.

Indeed, while less affluent Americans pour money into lottery tickets, they shun the financial markets, where folks regularly make money, rather than losing it. Barely a third of families in the bottom 50% of earners own stocks, according to the Federal Reserve. In all, just 54% of Americans are invested in the market.

It would appear many Americans would benefit from reading Aesop’s fable of the Tortoise and the Hare. “Do you ever get anywhere?” the Hare asks with a mocking laugh. For too many Americans, the answer is “no”—because they don’t have the discipline of the Tortoise.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include That’s RichSharing the LoadFamily Resemblance and Late Start. Follow Dick on Twitter @QuinnsComments.

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