Hoping to Win Big in the Lottery? Here's a Better Way to Become a Millionaire


The odds of winning may be near zero, but that doesn’t make the lottery any less popular. Americans spent $95.6 billion on lottery tickets in 2021, the most recent year with sales data available. That’s according to lottery statistics gathered by The Motley Fool Ascent.

Most players don’t win anything. So even if you like buying lotto tickets, it’s better to look at that as a fun diversion and not a retirement plan. And while some people think becoming a millionaire without winning a jackpot is out of reach, there’s a reliable way to do it.

The most effective way to become a millionaire

The best way to become a millionaire is by investing — putting your money in places where it can grow. It’s a strategy used by everyone from employees saving through 401(k) plans to the richest people in the world.

Over long periods of time, this multiplies the returns you get on your money. You don’t just end up with what you’ve saved. You’ll have that, plus the interest you’ve earned on it, and the compound interest you’ve earned on that.

For example, let’s say your household makes about $75,000 per year, which is near the median income. You’re able to set aside 10% of that: $7,500 per year, which comes out to $625 per month. If you kept that up for 40 years, then just by saving alone, you’d end up with $300,000.

Or, you could invest that money. Investing in stocks is one option. The stock market has historically returned about 10% per year. To be conservative, we’ll assume you get an 8% annual return over that same 40 years. You’d end up with $2.1 million. That’s seven times as much money and enough to make you a multimillionaire, and all because you invested wisely.

How to get started with investing

One of the most common questions that comes up about investing is how exactly to do it. When you haven’t invested before, it can feel confusing and intimidating.

It’s easier than you might think to make investing well part of your budget. Here’s how to get started:

  • Set up an investment account. If your employer gives you the option of opening a 401(k), you can start investing there. You can also invest by opening an account through a stock broker online. To find one, check out The Ascent’s list of the best online stock brokers.
  • Choose your investments. The simplest option is picking one or more investment funds, such as exchange-traded funds (ETFs). These invest your money across a large number of stocks for you, so you don’t need to pick stocks yourself. See what fund options your 401(k) plan or stock broker has available and choose the ones you like.
  • Automate your investing. Your employer will set this up for you if you’re investing through a 401(k) — just let them know how much you want to contribute. If you’re investing through a stock broker, you can likely schedule automatic investments for the same day every month.

The most challenging part will probably be choosing your investments. Personally, I put most of my money in a total stock market fund. That means my money is being invested across the entire U.S. stock market, so my portfolio will follow the market’s performance. If you’re interested in that, most stock brokers have this type of fund available.

Try getting started by investing 10% of your income, if you can manage that. It’s also fine to start with less if you need to, or more if you have plenty of disposable income. Remember that the key is to stick with it for the long term. Investing isn’t a way to get rich overnight. It’s a personal finance habit that pays off more the longer you do it.

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