Would you rather walk away with $30,000 or have a 50% chance to win $300,000?
there are always two questions here. is the guaranteed sum enough to be life-changing? is the statistical chance of the larger sum mathematically better?
$30k is not that significant for me.
The second one is worth $150k on average.
So I go with the chance.
Re: the first question, there are degrees. $100 is whatever, $100k means you buy a house maybe (but don't quit your job), $100m means you buy a fancy mansion plus a swanky beach house and a lake house and you never work again, $100b means you buy Congress, plus your favorite TV shows after they get canceled so you can uncancel them, plus a cruise ship.
You aren't buying Congress for $100B. A few members maybe, but not the whole thing.
You think they're expensive? $100k in dark money for their reelection campaigns and they'll be really keen to keep you happy. Maybe senators are a bit pricier, but not too much. Dividends from investments on $100b ought to keep them bought year after year.
What counts as insignificant or life changing obviously differs from person to person. But the general question is the same as a lottery: would you rather have a guaranteed $2 or a one in a 300 million chance at $50 million, only you're changing the values.
It’s not though, because statistically you’re likely to come out ahead and that changes everything. It’s more like, “would you want a guaranteed $2 or a 1/1000 chance of $5,000”.
The 30k would be a good idea. But, your not likely to get better odds on getting 10 times your investment ever in your lifetime. Beyond that, 30k will only get me though collage today, where as 300k will get me a nice house paid off in full. So the 300k would completely change my life, the 30k would make some things much easier.
In this market 300k is a broom closet
But paid in full!
In my situation, I could get a moderately large beachfront (or beach near) house for that price. But, there are concessions. Looking inland, there are a lot of options for around 200k. But, most people would not consider 30 countries as viable options.
If you live in a nation where 300k USD can get you beachfront property, you do not want to be near the water as such nations will not have the resources to fight rising sea levels.
It was more so an example of what options are out there more than anything else. Mind you, some of the countries on the list are not exactly poor. But the cost of living in the US is astronomical at the moment. That said I doubt the sea level rises will be too much of a problem over the next 5-10 years. At which point you can sell the property and move further inland or onto a mountain. There are also a few places in the US where you can get a good house in a rural area for around 150k, however, the cost of living in the US is more of a long-term problem. Regarding the other countries, I do have a concern that they potentially likely to have a war on their land in the next 5-15 years. So geopolitics would probably be more of a concern than climate change.
Maybe in NYC or something. But that's half the value of a nice house in a nice neighborhood where I'm currently at. Probably the full value of a condo. Or 20 years worth of rent for a decent one bedroom apartment.
42% of redditors are either desperately broke or bad at math.
30k. i'd typically rather have a sure thing then gamble. and 30k would be life changing enough, though i can definitely see 50% odds for 10x that being a worthwhile bet.
dear lord, It is always best to choose the safe ones, but there will always be bp who choose the other option.
Statistically it's always better to consistently take the higher value option. 50% of 300k is 150k, so as you weigh the value of 30k vs 50% of 300k, the comparison should really be between 30k and 150k.
Statistically, yes, but the thing is, you don't get to plead the law averages in real life. People pay for insurance for precisely that reason.
no, is not i'm not going to get it 100% sure
I'm not joking, this is basic statistics. If you always take the optimal route, you'll come out ahead in the long run. You may lose this coin flip, but if you always choose the optimal path it'll pay out over your life.
I will not continue with this, I know very well what it is like, it is an endless constant of denials, so I will leave it there.
I will not continue with this, I know very well what it is like, it is an endless constant of denials, so I will leave it there.
$30k. It was a hard choice, but that would clear the last bit of debt I have besides my mortgage with a bit left over. Not going to drastically change my life but it would be a pretty good boost.
As I can get along without the 30, I'll just gamble on the 300. Better odds are hard to find.
If I’d take the 30k, then I’d probably end up in the casino anyways. Therefore I might aswell take the 150k coin flip for potential 300k.
If its not lifechanging, take the EV. This is a nice case study on why rich get richer. People who don't need the safe choice are able to take the risk which pays off more.
I got nothing and if I walk away with nothing I would not have lost anything
Mathematically 30k is 10% of 300k. If the odds are truly 50% on getting the 300k, that is the only logical outcome. If you ran this scenario 10 times, you'd have 300k one way, (and again assuming it is really 50%) and in the other you'd have $1.5M (10 x 300k x .5). Yes, you COULD end up with nothing but the odds are so heavily in favor of going for the 300k its a no brianer.
Right now? The 30k would be life changing. I'm taking the guarantee.
I wouldn't say life changing unless you have immediate liquidity issues (like a high interest personal loan weighing you down for example). It's probably a full year's worth of salary for many, but I still think 50/50 for 300k is the much better deal.
It boggles my mind that you don't believe 30k is life changing; it's likely to be life changing to at least half the worlds current population.
I mean the prompt is in USD ($), no? That seem to imply to me that we are considering this question for someone in the US not somewhere else in the world. And in the US, the median income is around 38k a year. So yeah, not life changing in that context unless you again have immediate liquidity issues that would otherwise bury you financially. But the money itself would otherwise probably just end up being a nice cushion. Which is very much great for peace of mind, but it's not really going to upgrade a person's lifestyle much. Maybe if you invest it for 40 years at compounding interest, then it will substantially impact your retirement, but it's not changing your life in the short term.
My man, how many people in the US are living paycheck to paycheck? Isn't it something like 1 in 5 kids who don't know when their next meal is coming from. We are into semantics to what life changing constitutes. This would be life changing for them
And how exactly would 30k change that situation is my question? If you are living paycheck to paycheck, then after getting a one-time payment of 30k you are still living paycheck to paycheck. You just have more leeway for a few years until you burn through that cushion. Exactly how is that life changing? Just because a person's finances aren't good doesn't mean that 30k is going to save them from that situation if the basic income vs expenses of their life aren't changing. It's just not enough to change that equation relative to US living costs.
With 5% interest on 300k, you are getting an additional 15k a year to work with. Not to mention putting it towards real estate so you can stop throwing away rent money to some landlord or towards an education/training program to improve job prospects. Now that's life changing. It's on a different scale.
You have to realize that the number of people that would immediately put it in a high yield is very few. Most people aren't doing well enough to "risk" not having the immediate help. 300k is great, but you run the risk of having nothing.
30k I can make reasonably "easy" enough. 300k would change my life forever. I'm going with 300k