Magazine article USA TODAY

Who Really Wants to Be a MILLIONAIRE?

Magazine article USA TODAY

Who Really Wants to Be a MILLIONAIRE?

Article excerpt

"Game shows and lotteries are dreams come true for only a few people. Saving and investing can be a reality for all Americans."

GAME SHOWS have made a comeback. Traditional stalwarts "Jeopardy!" and "Wheel of Fortune" enjoy steady popularity, but "Who Wants to Be a Millionaire," with its $1,000-000 prize for the person who correctly answers 15 multiple-choice questions, has rekindled excitement, garnered top ratings, and spawned numerous imitators. Meanwhile, lotteries are a national obsession, as nine-digit jackpots entice players from nearby states. Clearly, the chances of winning a lottery or becoming a game show "returning champion" are astronomically small, so why are so many people entranced by the allure of big bucks at incredibly long odds?

A Consumer Federation of America/Primerica poll in October, 1999, showed that a majority of Americans are under the belief that it is easier to get rich by winning a lottery or sweepstakes than by saving and investing modest sums of money. It seems inconceivable that the little bit of money you could invest would ever rum into the millions a lottery jackpot offers, so you might as well try to get lucky, right?

Many people seem to think so. Millions of viewers tuned in on Nov. 19, 1999, to watch John Carpenter walk away from "Millionaire" with $1,000,000 (before taxes, of course), the largest prize ever won on a television game show until then. How long would it have taken him to accumulate that much wealth by investing'? According to a Cato Institute study, if he put $2 a day into a stock fund that has the historical average return of 11% per year, it would take him 50 years--the career span of an average American--to amass just over $1,000,000.

Other game shows don't offer the big prize that "Millionaire" does, but viewers often feel that the contestants an those shows are rich or enviable because of the amounts they win. Yet, looking at how modest their winnings truly are makes one wonder just why people should be impressed.

The biggest all-time winner on "Jeopardy!," Bruce Seymour, won $305,989 in 1990. If someone were to undertake a $2-a-day savings plan and build up equity in a mutual fund, he or she would have the same amount after about 36 years. Moreover, the odds of achieving that would be far greater than the odds of winning on "Jeopardy!"

The biggest winners on "Wheel of Fortune," Peter Agryropoulos and Deborah Cohen, won $146,529 in cash and prizes during Sweetheart's Week in 1996. Saving $2 a day in a mutual fund that tracks the market would yield that amount in about 29 years.

You don't even have to be a financial genius to make such substantial investment returns. All of this is possible thanks to what Albert Einstein called the "most powerful force in the universe"--compound interest. No matter how much you save, the key to wealth accumulation is simple: Start early, be patient, and let the investment grow and accumulate. In tact, of the $1,000,000 accumulated over 50 years in the $2-a-day savings plan, just $37,230 of it derives from the contributions made to the investment. The remainder ($962,770) comes entirely from the momentum of compounding interest.

Remember, too, that $2 a day for 50 years is simply a starting point. The older a worker becomes, the more money he or she usually makes, and the more can be devoted to investing. If you can become a millionaire in 50 years on simply $2 a day, imagine the exponential growth the investment would yield if you increased that amount. Let's say you save $6 a day. The power of compound interest combined with the historical return on stocks would make you a millionaire in 37 years.

An "out of sight, out of mind" approach to saving is also very effective over long periods of time. Consider this: If your grandparents had put $100 into a similar mutual-fund stock account in 1928 and never touched it again, today they would have a "grand prize" in excess of $200,000. …

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