This is not investment advice, and as part of the Yotta account, both the new user and I earn 100 tickets with my referral link (or the code TITUS2) once the new user deposits at least $25, for 1 ticket.
A few weeks ago, I discovered a new type of savings account. Savings are usually boring, and I’m glad more and more fintechs are now focusing on making the FDIC insured account more cool. Compounding interest is great, but when it only yields 0.6% per year, it takes a looooong time to make real money. For example, if you deposit $100 in a high yield savings account, currently at 0.6%, and leave it there for 20 years, you’ll have $112. If the inflation rate is higher than 0.6%, then you’ll have lost money in real terms. Not the best deal.
I wrote about Save a few weeks ago, where they invest your interest to make higher returns in the stock market, while keeping the principal safe.
Pay and Win VS Save and Win
Now it’s time to talk about a different type of behavior – a negative risk-seeker, commonly known as the gambler. I’m talking about the people who buy lottery tickets as a regular habit. The ones who play the slot machines in Vegas. The ones who play backjack, roulette or poker with the hope of getting rich, while also getting those tasty dopamine hits every time there’s a game move.
Let’s focus just on the lotto players. The average American spends about $1,000 / year in lottery tickets that have an average win rate of 1 in several hundreds of millions of entries. They are more likely to get struck by lightning than to win anything at lotto. But they get their dopamine every time there’s a drawing, in exchange for that $80ish every month.
What if you could keep those $80 and still get the same dopamine hit?
I found Yotta, through a Youtube real-estate influencer, and I started looking into it. The startup is a YCombinator graduate, fresh on the market.
They combine an FDIC insured savings account with a guaranteed rate of 0.2% and a weekly lottery with prizes of up to $10M. For every $25 you deposit, you get a ticket with 7 numbers – 6 regular and a Yotta number. Every day, they reveal one number, at 6pm PT. Each Sunday afternoon, you can see how much you have won, all in the app. Simple and fun.
The app easily connects to bank accounts through a service called Plaid, now part of Visa, so super-secure. While you can put in whatever you like, due to financial regulations, you can only deposit a maximum of $10,000 / day and can withdraw a maximum of $40,000 per month. And remember, FDIC only insures accounts of up to $250,000, so putting in more is riskier.
How does it work?
Technically, Yotta makes more on your money than the 0.2% that it’s committed to pay out on a regular basis. The rest of the profits they make from holding your money in risk-free assets they distribute through the lottery system – via actual cash or a Tesla Model 3.
If you calculate your odds of winning today, by playing consistently, and without too much network growth, you could be looking at yields of over 1.8% per year at worst, over 3% per year at best.
So, from my perspective, anyone who plays scratch cards, lottery tickets and any other form of small-value gambling should definitely try out the Yotta app and put that $80 per month money to work for them, instead of spending it.