Dollar Bits: Dreaming is free, lottery tickets aren’t


Dreaming is free, lottery tickets aren’t

The $700 million Powerball jackpot is the second-largest in US history — we did the math to see if it’s worth buying a ticket
When trying to evaluate the outcome of a risky, probabilistic event like the lottery, one of the first things to look at is expected value. The expected value of a randomly decided process is found by taking all the possible outcomes of the process, multiplying each outcome by its probability, and adding all those numbers up. This gives us a long-run average value for our random process.

Since you are dreaming…. here’s 9 over-the-top purchases you could make if you won the $700 million Powerball jackpot. Furthering the dream…  If you win the Powerball lottery, don’t take the payment in a lump sum. That said, on our morning walk today, we had the “what would we do with all that money” chat. So we decided that if we were to receive a tax-free $100 million windfall, we would:

  • Take $50 million and put it in a recurring 3-month T-bill. Today, that pays about 1% annually, so that would give us $500,000. Of course, that amount would change with interest rates. If short-term interest rates jumped to 2%, we would have $1 million a year in spending money.
  • Take $25 million and give it to friends, family, charities, etc.
  • Take the remaining $25 million and improve our lives – home improvements, vacations, etc.

Incidentally, we did splurge and spend $2 on a lottery ticket. Wish us luck.

4 Tips for Sticking to a Retirement Savings Plan
The trickiest part comes next – when you have to consistently contribute the amount specified in your plan to your retirement savings accounts.


Retirement and the Single Woman
Then here’s another frightening statistic that impacts women’s retirement planning. Women live longer than men! According to Social Security’s actuarial tables, a 60-year-old male has a life expectancy of 21.55 years, while a woman of the same age can to live another 24.56 years. And we’re all “above average” — so that translates into more years and more expenses.

You can change your portfolio or you can change your behavior.
Restructuring the portfolio construction process and how we communicate performance can help significantly. Changing the actual portfolio may be a side-effect of a good alignment process.

Misc. bits

Any idea why more expensive wines taste better?
Researchers tapped 15 men and 15 women around 30 years old and rigged the subjects to an MRI scanner as they tasted the wines, which were randomly labeled as costing $3, $7 or $21. Of course, they were really sipping the same $14 bottle of red, which the report described as “average to good quality.” But the subjects said the “more expensive” bottles tasted better.

Why the Apple iPhone has succeeded for a decade.
Since Steve Jobs introduced the iPhone in 2007, the smartphone has become a close — if not the closest — digital pal for millions of people around the world. It’s hard to believe we’re still together after 10 years, which is eons in the tech industry. What’s the glue that keeps us together?

ESPN Pulls Asian Announcer Named Robert Lee To Avoid A Mass Triggering Event
This is truly unfortunate… We’ve been saying this a lot lately, but just when you thought the political climate in this country couldn’t get any wackier ESPN has to go and pull an Asian-American announcer, who just happens to be named Robert Lee, off the William and Mary vs. University of Virginia college football game because of concerns they might create a mass-triggering of America’s snowflakes.


Photo by Upupa4me via Flickr

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