Many See Lottery as a Better Bet Than Saving and Investing

Many Americans believe they stand a better chance of getting rich from lotteries or sweepstakes than from saving and investing, a poll found.

Stephen Brobeck, executive director of the Consumer Federation of America, said the findings suggest that misconceptions about how small amounts of money can grow if saved or invested may be preventing some people from taking steps to improve their lot.

The federation and the financial services firm Primerica released the telephone poll of 1,010 Americans 18 and older conducted July 22-25.

The survey found that most Americans undervalue the extent to which savings can accumulate over time. People were asked, for example, how much $25 invested weekly for 40 years at a 7% annual yield would amount to.

Fewer than a third guessed over $150,000. The correct answer is $286,640.

A series of similar questions found that younger and lower-income Americans, along with women, tend to most undervalue how savings can add up.

In a question designed to colorfully illustrate such misconceptions, the survey found that 27% of Americans believe that winning a lottery or sweepstakes is their “best chance to obtain half a million dollars or more in your lifetime.”

Among households with annual incomes of $35,000 or less, those holding that belief jumped to 40%.