I don’t play the National Lottery, although I can understand why others do. Who doesn’t dream of getting a life-changing fortune overnight? One that allows you to stop worrying about money, pack in your job, and follow your dreams.
It probably won’t be you
I’m not going to try talking you out of a bit of fun, although I will remind you that the chances of winning are very much against you (as if you didn’t know).
Five years ago, the odds of matching all six numbers on the Lotto were lengthened from an already wafer thin 14m-to-one, to 45m-to-one, which are simply mind-boggling to me. The change was designed to boost your chances of winning a smaller prize, but I don’t want to gamble my financial future on such thin odds.
Others are pinning their get-rich-quick dreams on Bitcoin. Its astonishing price surge from just a few cents to nearly $20,000 in December 2017 made millionaires, or even billionaires, of early adopters. But others who bought at its peak are still nursing major losses.
Bitcoin is too volatile for me
The cryptocurrency has recovered, with the price hovering around $10,000, but there’s no way it can match its previous breakneck growth. It could climb higher from here, but just as easily fall. The risk/reward ratio has shifted, and I would advise caution. While you can play Lotto from just £2, you need a lot more to play Bitcoin. I’m talking thousands of pounds at least, and that, inevitably, means you have much more at risk.
Personally, this isn’t how I would aim to get rich. I prefer the more reliable method of investing in the stock market. You won’t make your fortune overnight, but if you stick at it, year after year, it can transform your contributions into a small fortune.
Investing in a Stocks and Shares ISA has one major advantage over the National Lottery and Bitcoin. Your chances of success are much, much greater. Yes, markets are volatile in the shorter term, but in the longer run, they deliver superior returns to almost every other asset class.
I’d buy stocks and shares instead
Since inception, the UK’s index of blue-chip stocks, the FTSE 100, has produced an average annual return of 9% a year. It has done this by giving you a combination of capital growth and dividend income, which compounds over time.
You can also invest in fast-growing smaller companies through the FTSE 250, through low-cost exchange traded funds (ETFs) offered by the likes of iShares and Vanguard. That’s the easiest way for you to get started, using an online investment platform.
Alternatively, you could build you own portfolio of individual UK company stocks and shares, in a bid to generate even better returns and outpace the market. This is for more experienced investors, so it’s a personal decision, depending on how confident you feel.
With Lotto and Bitcoin, the odds are against you. The stock market offers you a much safer way to strike it rich.