Don’t gamble on the National Lottery. I’d aim for a million like this

The National Lottery might seem like a good way to potentially make money, but most players end up losing. Here’s what I’d do instead.

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The National Lottery might seem like a great way to make £1m, but it isn’t. The vast majority of people who play end up losing their money, and technically, playing the lottery is classed as gambling. 

To give you some idea of just how unlikely it is that you will win the jackpot, it is estimated that you have a higher chance of becoming prime minister. 

But while it is almost impossible to make a million with the National Lottery, there are plenty of other options available to you. Some of these have a much higher chance of success.

Slow and steady

In my opinion, one of the best ways to make a million is to invest your money. Putting away a little every month, might not make you a millionaire overnight, but over the long term, as long as you stick to your savings habit, the results could be outstanding.

For example, one line on the National Lottery’s Saturday draw costs £2 per player per week. So, if you are playing once a week, that’s a total cost of £104 a year. As I have already covered above, the chances of you winning anything from gambling on the National Lottery are very low. Therefore, this total cost is actually a potential total loss of £104 a year. 

In comparison, if a saver invested this £2 a week into a low-cost FTSE 100 tracker fund, rather than gambling with the National Lottery, I calculate they would end the year with a savings pot of £109. 

This is only a rough, back-of-the-envelope calculation and based on long-term average return figures for the FTSE 100, but the difference in returns is clear. The difference between investing and gambling away your money could be £213. And even if you have the occasional small lottery win, the chances of coming out ahead remain very, very tiny.

The power of compound interest

If you could improve your financial situation by £213 over the space of a year just by investing, rather than gambling away £2 every week, think what you could do with an even higher level of savings.

A saver putting away £100 a week, or £5,200 a year would accumulate savings of £80,000 over the space of a decade according to my figures. This assumes that the money is invested in a low-cost FTSE 100 index tracker fund with an average annual return of 8%.

Saving the same £100 a month for two decades could generate a savings pot of £255,000, and if you can keep the contributions up for four decades, you could accumulate £1.5m worth of savings. 

What are you waiting for?

So, that’s how I would make a million pounds. Rather than gambling on the National Lottery, and losing thousands during decades of play, I’d invest the money saved, plus £98 more every week into a low-cost market tracker fund.

The returns wouldn’t be as instantaneous as the National Lottery could potentially be, but over the long term, it is much more likely that you will make a million using this strategy. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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