Buying Lottery Tickets ISN'T Investing

It's fascinating (and annoying) that people want to get rich quick. The bad news is it's easy come and easy go. People do all sorts of crazy stuff trying to get rich quick. Back in 2022 while repairs after the Odette disaster were done, I wrote an article about not investing while having a gambling addiction. Some people may have pulled their money out of the index funds and played Axie Infinity trying to make a quick buck. Some people got into cryptocurrency with the same hopes of getting rich quick fast. Before cryptocurrencies and Axie Infinity, the lottery ticket was treated like a "golden ticket". When I mention "golden ticket", some people may have seen the classic Willie Wonka movie where each child had a golden ticket. Only one of the children could inherit the main character's candy factory.

It makes me laugh (and cringe) that people waste their money on a lottery ticket. A wife can complain about her husband buying lottery tickets instead of spending the money on their needs, saying the Return On Investment (ROI) will be better. Calling buying lottery tickets an investment is a huge insult, even if it's not directed at my face. I recall fighting with a working scholar, who mentioned her sad situation. She didn't only waste my time. She gave her sob story, mentioning that her father would buy lottery tickets, hoping they would no longer be poor. I replied, "Isn't it any wonder your financial situation is like that?" I didn't have high financial literacy during that time. I didn't know I could invest in stocks via UITFS at that time. However, being raised by frugal parents (though they too had their own mistakes) gave me that important insight. As my frugal parents will say, "Don't rely on the lottery." It's because the lottery is a gamble. It's not investing at all! How many people win the lottery vs. those who lose it? It's like a raffle draw where you can't hope to win the car. You win the car, you win it. You don't win it, you don't win it! In short, it's a gamble or a game of chance.

As I learned about investing in stocks via UITFs (and take note, I never learned it in school), here's a quote from Peter Lynch. His advice is to never treat stocks as lottery tickets. Behind every stock is a company. A Jollibee stock is a piece of Jollibee, and Jollibee is a company. In those UITFs, there are multiple companies under them. My recent investments are with ATRAM's international stocks. The consumer trend fund focuses on companies feeding that sector. The technology fund focuses on companies feeding that sector. The ATRAM Global Equity Opportunity Fund invests in different companies in different sectors. The PSEi index funds invest in the 30 best companies on the Philippine Stock Exchange (PSE).

True, some stocks do fail when the company fails to perform well. However, stocks from companies like Jollibee and Apple are bound to appreciate in value. One thing I learned about UITFs (and any seasoned investor beat me to that) is that investing in stocks won't get me rich overnight. Instant gratification is non-existent in buying a stock or investing through the UITFs. I could invest PHP 5,000.00 in Jollibee, and I have to wait. I may want to buy more Jollibee stocks when the value is lowered during certain seasons. I could buy into the PSEi with an index fund. I invested this amount toda,y but shouldn't expect to get rich quick tomorrow. Stocks aren't a gamble but a long-term investment. Some people even hold their stocks for five or even 10 years.

The lottery offers instant gratification when one wins. What do most people do with the lottery win anyway? Most prefer to do "happy-happy" instead of investing the money. It's the same feeling when people win a gamble. People would gamble the wins from the gamble. Maybe, we should call it "re-gambling" the money because it's so addicting. It's the opposite of reinvesting when someone reinvests the money. I would reinvest the money market interests into a stock-based UITF. The interest coupons still have that addictive feeling. However, the addictive feeling isn't deadly compared to the instant gratification of lottery wins.

That's why I don't buy lottery tickets. Lottery tickets should be treated like mahjong cards or playing cards. Nobody reall gets rich sustainably through gambling. It's because the shortest road often leads nowhere.

Comments

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