Lottery jackpot: $120m is nice but you can make your own luck

This week’s $120 million Powerball prize is the second-largest jackpot in Australian history, but there are other ways to enjoy lottery-like wins.

An extremely fortunate Aussie could become $120 million richer this week, thanks to the nation’s second-biggest Powerball jackpot.

I’ll be popping into a newsagent to grab a few games before Thursday, even though the chances of winning are horrendously low.

The chance of winning Powerball’s division one is 135 million to one, according to the Lott website.

In comparison, the chance of being struck by lightning is estimated to be about one in 12,000.

And while you can increase your odds of a lightning hit by standing in the middle of a large oval during an electrical storm, you can’t improve lotto odds unless you spend more money buying more tickets.

The Lott says it expects up to half of Aussie adults to enter Thursday’s Powerball draw, which is the second biggest in history after $150 million Jackpot in 2019.

The second-largest jackpot in Australian history is drawn on Thursday Picture: Ian Currie.

So why do so many of us throw money at lotteries?

Gambling experts suggest it flows from people’s inability to comprehend large numbers and insane odds, plus our tendency to over-estimate our chances of success.

For me, it’s the enjoyment of planning in our heads how thinking about how to spend the money. Between buying the ticket and the lotto draw that almost certainly won’t deliver your dream result, there’s a period of excitement where everything seems possible.

Another way to receive big bucks by making your own luck, but this can often take several decades and a pile of patience.

Many investments have delivered lotto-like results for long-term backers. Some still seem like a crazy gamble, while others have proven themselves over many decades. Here are some examples.

CRYPTO: If you had the foresight to buy $100 of bitcoin back in 2011, today it would be worth more than $4 million. Cryptocurrencies are booming but their volatility remains scary. The biggest crypto, bitcoin, has doubled but then halved twice in the past 12 months, and thousands of other cryptocurrencies have had even crazier rides.

FORTESCUE SHARES: Billionaire Andrew Forrest’s Fortescue Metals Group has delivered the most spectacular long-term gains of any major Aussie company. Since it was founded in 2003, the iron ore company’s share price has climbed from 3c to $20.50. That means a $2000 investment in Fortescue back then would today be worth more than $1.35 million.

Powerball is harder to win than other lotteries because of its extra number, but it still entices.

APPLE SHARES: Several US tech giants have delivered massive returns in the past two decades. If we look at Apple, the world’s biggest company by sharemarket value, a $2000 investment in its shares in 2000 is today worth more than $1.2 million.

HOUSE PRICES: Bricks and mortar may seem boring but its gains over decades have been huge – with the bonuses of roofs over heads or rental income. Adelaide’s median house price has grown from $36,000 in 1980 to $637,000 in 2022. Brisbane rose from $34,500 to $810,000, Melbourne from $41,000 to $1 million and Sydney from $65,000 to almost $1.4 million.

A key to investment success is diversification. By spreading your money gradually over many different investments in different asset classes and different countries, you’ll do well.

It won’t be that $120 million one-off Powerball windfall that you have a one in 135 million chance of winning, but in the long run it will deliver some of the riches, luxuries and experiences that potential lottery winners often dream about.

Originally published as Lottery jackpot: $120m is nice but you can make your own luck