The National Lottery might seem like an excellent way to make a lot of money very quickly. However, your chances of winning are so slim, you’re more likely to lose money than earn your stakes back.
The odds of winning a jackpot in the National Lottery are 45m to 1. Meanwhile, the odds for winning the EuroMillions jackpot are 140m to 1. As such, I believe gambling on the National Lottery is one of the worst financial decisions anyone can make.
I think your chances of making a life-changing sum of money are significantly higher in the stock market. Today, I’m going to explain why.
National Lottery drawbacks
As noted above, the odds of winning the National Lottery are stacked against the average player.
By comparison, every investor who’s owned a basket of blue-chip UK stocks over the past few decades has made money. Since the early 1990s, UK equities have produced an average annual return from investors around 8%. The wealth-creating ability of the stock market should not be underestimated.
For example, if an investor played the National Lottery every week for the past three decades, they’d have spent an estimated £3,120 on lottery tickets. That’s assuming a weekly ticket price of £2.
The chances of winning anything big during this time would have been incredibly slim. However, if the same £2 a week were invested in UK stocks, it would have grown to be worth over £13,000. That’s a difference of £16,120. It’s difficult to argue with these figures.
The road to a million
So, rather than gambling on the National Lottery, I’d use the approach outlined above to invest to build a £1m nest egg.
I think the best way to invest in the market is to buy a diversified basket of blue-chip stocks. Companies such as GlaxoSmithKline and Phoenix Group have the potential to provide investors with a high-single to double-digit annual return. This could increase investors’ chances of being able to build a life-changing sum in the stock market.
Another advantage of using stocks over the National Lottery to build wealth is the power of dividends. Dividend income can provide a steady stream of funds, which can be reinvested back into the market.
When dividend income is reinvested, investors pick up more stock, which then produces more dividend income. Over time, thanks to the power of compound interest, this virtuous cycle of reinvestment can be a potent tool.
The bottom line
I plan to make a million using the above strategy. I believe it’s a simple and straightforward way to build wealth without gambling on the National Lottery. Investing in the stock market is also a tried-and-tested way to build a sizeable financial nest egg.
So, now could be the time to start your journey, and build a diversified basket of UK dividend shares.
