I was talking to a friend recently and had a conversation which made me want to pull my hair out and scream loud profanities. We were discussing retirement and the conversation went like this:
Me: You do contribute to your 401(k), right? It’s important to start young.
Her: I contribute some, but my retirement plan is the lottery.
I started laughing, but she got all serious and went on to explain that indeed, the lottery was how she planned to retire. While I listened in horror, she explained how she buys $20 in lottery tickets every week ($1000/year folks!). She was convinced that she would soon hit it big and never have to work again.
I’m not a violent person, but in my mind’s eye, I had seized her by the shoulders and was trying to scream some sense into her:
“WHAT THE &^%$ ARE YOU THINKING?!?!?”
But really, I almost did fall out of my chair. I thought about counseling this person on the odds of hitting the big one, but I could tell it would have been pointless. She was convinced beyond reason.
For fun though, let’s use this calculator to see where she’d be if she decided to invest the money instead. She is 30 and I’ll assume a typical 10% rate of return. Look at the results:
- 10 years: $17,556
- 20 years: $65,08
- 30 years: $193,742
However, my friend will not have the extra $193,742 when she is 60. Instead, she will have $0 because of this lottery nonsense.
I can’t believe people do things like this. I won’t go into the numbers, but if you really think you’re going to win the lottery, peruse this article.
You really want to hit it big? Let me give you some tips:
- Study something decent: There are tons of jobs that go unfilled because no one wants to do them. If you’re young or have the to opportunity to go back to school, study computers, accounting or engineering. You’ll be making a great income right out of the gate. Headhunters will step over each other just to talk to you.
- Work your ass off: Do a better job than your co-workers. If you have a task, do it the best you can and then do something unexpected to make it a little better. People will notice.
- Invest young: Compound interest baby.
- Invest smart: You won’t beat the stock market. Chasing individual stocks is a fool’s game. Buy index funds and consider diversifying with P2P lending and rental properties.
Oh, and don’t play the lottery.
*This is an actual sign at the Milwaukee airport right after you go through security. It gives me great joy every time I see it. I also love looking at the confused gazes of my fellow travelers.
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Juliet Wallis says
When contemplating retirement the majority of us seem pre-programmed to only consider the far reaching financial implications of never bringing in an income again! But the fact of the matter is that there are many more things to consider if planning on retiring abroad, not to mention the fact that many retirees overseas pick up odd jobs and part time positions advising and assisting other expatriates with their lives and businesses anyway!..
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