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Many see lottery, not saving, as way to wealth

Updated:
WASHINGTON (AP) -- 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.

"Most Americans are now aware of the consumer debt trap and the
need to build wealth but don't believe they can do so," said
Brobeck.

The federation and the financial services firm, Primerica,
released the poll and a companion study of household wealth today.

An analysis of the latest Census Bureau data on household wealth
-- from 1995 -- found that the median savings of American families,
meaning half have more and half have less, was just $1,000.

That includes the value of money in the bank and stocks and
bonds, minus household debts other than mortgages, such as credit
card balances. Without subtracting debt, the median savings was
$2,700.

The value of home equity or other property and pensions or
401(k) retirement plans sponsored by employers was not included.

Meanwhile, a telephone poll of 1,010 Americans 18 and older
conducted July 22-25 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 percent 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 percent of Americans
believe that winning a lottery or sweepstakes is their "best
chance to obtain a 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 percent.

Overall, fewer than half -- 47 percent -- of all those surveyed
said that saving and investing some of their income was the most
reliable route to wealth.

The consumer federation and Primerica are using the poll and
study to kick off an educational campaign that will offer tips on
saving. The poll has an error margin of plus or minus 3 percentage
points.

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