By: Jimmy Fuentes
With the Powerball jackpot now $700 million high (won as of 08/23/17 by a winner in Massachusetts) many Americans all purchase their lotto tickets with high hopes of hitting a home run and cashing their check (roughly $400 million after taxes. Lame I know.) But is purchasing a lottery ticket your ONLY way to becoming wealthy? Are there any alternatives? (the answer is "yes, yes there is" don't let anyone else tell you otherwise. If they do, send em my way and I shall throw hands and lecture them.)
According to The Motley Fool, the lottery industry rakes in $70 billion or $300 per adult that indulges in the lottery. Half of those lottery tickets are purchased by lower-income households already living paycheck to paycheck or are near the poverty line. Even if you aren't part of the working class and indulge in lottery tickets from time to time (obviously within a budget), the odds aren't in your favor of winning the grand prize anyway, you have a 1 in 292 million chance of winning, it's a pretty crappy percentage. While there isn't any problem with occasionally purchasing a lottery ticket, (there is actually, just don't do it, the ROI is not worth it) we can place that cash into something that will give you an ROI, that won't test your luck, and can be very useful.
Here are 4 ways you can place those $300 into better use
Placing $300 a year in a low-cost index fund (presuming an average return of 8% and dividends reinvested every quarter)
This ensures a guaranteed way to becoming wealthy, while you might not hit $400 millionaire status, you certainly have a good cushion of cash that can help pay off bills, emergency expenses, send your kid off to college, travel, retire, etc.
Below is a pretty graph that I quickly made on excel showing you your balance at the end of every decade for 60 years.
"But... but... Jimmy, I can't place $300 FLAT and besides, a lottery ticket averages about $2 - $5." Not to worry friend, let's take baby steps then, if you can't place $300 down in one day, then try $25 a month, if that still seems like a lot, placing $0.85 a day in your brokerage account, and by the end of the month, you can allocate the money and place it in the index fund.
Filing an LLC and tax ID for your small business
Ever envisioned on starting and operating your own small business? Before you create the business itself, you must file an LLC. "Limited Liability Company." In case your company gets sued or runs into legal troubles, your PERSONAL assets aren't at risk and you aren't held responsible for all debts and liabilities your company might have. As far as your tax ID, of course, anywhere where money flows, Uncle Sam so happens to follow and be there, and he expects for you to pay a fair share of the cash your business earned or else, you'll do plenty of time in jail. In order to avoid jail entirely, you'll need an EIN submitted to the IRS to file your business taxes.
Believe it or not, all of this is fairly cheap, depending on what state you live in, the filing costs can range from $50 - $800 (a bit over $300, but you get the idea.) Starting a small business and having it expand under good maintenance and leadership is a sure way of ensuring your money and net worth to grow over time.
Spend it on your education
With $300 you might be able to attend night school at your local community college, pay for 1 - 3 credit hours. If you're not a fond of going to class (like I am) spend those $300 on an online course that can teach you numerous or an important skill set. Skills that aren't necessarily taught in school that could benefit you in the future. If those options don't suit your needs, then purchase some books or audiobooks that can have a significant impact on bettering your life. Something that is bound to give you value and help you in the future. This is my quick checklist of the books that I have read 2 or 3 years ago and still help me in life today *coughs* contains affiliate links *coughs*: Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway's Vice Chairman on Life, Business, and the Pursuit of Wealth With Commentary by David Clark, The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph, The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life, and Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Simply save the money
If none of those 3 options got your appetite wet, do the simple thing and save the money so you can use it for later or during an emergency. $300 is a very hefty amount, in the future, it can go towards a downpayment on a phone, laptop, or any latest gadget. A small vacation, it can pay off a portion of any bills or loans you might have, like student loans, credit card bills, utilities, or even rent. The point is to use the $300 wisely and not chase $700 million with a 1 in 292 million chance of winning.
Please share amongst your friends and family who would be interested in reading my blog, I would very much appreciate it. Also be sure to comment what you would do with $300 a year if there was something I did not list here.