Playing the National Lottery’s Set for Life? Here’s why you shouldn’t bother

Launched back in March and played on Mondays and Thursdays, the National Lottery’s Set for Life game is the latest attempt to get us to part with cash with the dream of striking it big. By matching five numbers between 1-47 and the ‘life ball’ between 1-10, winners will receive £10,000 every month for 30 years, equating to a total £3.6m.

Of course, this all sounds really rather lovely. The fact that the prize money is paid in installments rather than in one lump sum should also help prevent at least a few winners from splurging the cash on fast cars and slow ponies. 

But let’s stop dreaming about what we’d do with such income for a second and consider the actual likelihood of winning. Back in March, Camelot calculated that the odds of scooping the top prize were around one in 15.3m. To give some perspective, academic research has found that the odds of being struck by lightning in the UK are one in 1.2m. So it “could be you“, but you’re far more likely to be frazzled in a storm. 

In addition to the very low odds of winning, another limitation about this game can be found in the small print, namely that this monthly payout will not rise in line with inflation. So, while £10,000 a month is clearly an awful lot of money right now, its spending power will be drastically reduced by the time we get to 2049.  

By now, you’ll probably understand that I’m not a big fan of Set for Life or, indeed, any of the other games run by Camelot. A bit of fun? Sure. A surefire way of to wealth? Sadly, no. The odds of growing rich from the stock market will always be better. A lot better.

But isn’t investing gambling too?

Investing is sometimes presented as being akin to gambling. There’s some truth in this. Do minimal research and stuff your portfolio full of loss-making companies, or highly volatile biotechnology and mining stocks, and see what happens. You may get the odd winner, but you’re more likely than not to lose your shirt.

So long as you back quality companies for a long time, however, the odds of ‘winning’ are far better. After all, this kind of strategy hasn’t done one of the UK’s most popular fund managers much harm.  

Will holding for the long term bag you £3.6m like Set for Life? That’s clearly dependent on the savings you have to begin with, how much you’re able to add along the way, and how you allocate your capital. To give you an idea, you’d already need to have £475,000 to invest for 30 years to get near the magic £3.6m, assuming an annualised return of 7% and no additional contributions over the years.

But don’t despair just yet. Any money set aside for the future is a good thing since it allows you to benefit from the power of compounding (essentially, interest on interest). Moreover, investing in listed companies gives those with many years still in front of them the opportunity to overcome the aforementioned issue with inflation. That comes by searching for those that have shown a willingness to pay quarterly or biannual dividends that consistently eclipse this silent killer of your finances. I’ve looked at a couple of such businesses here.