Melbourne Cup: Enjoy the Day, Stay in Control

As the Melbourne Cup approaches, remember even small bets can add up, and the odds aren’t in your favour. In a field of 24 horses, you lose 96% of the time.

Written by Dona Edwards (AR 1262208) authorised representative of Industry Fund Services Limited (AFSL 232514)

The thrill that comes from the potential of a big win can be tempting, but the odds are stacked against you. The dopamine hit from a win (or near win) which feels so close, urging you to keep playing. But what are the chances of winning?

In reality, the odds are stacked against you.

Whether you're playing the pokies or a skill-based game with elements of chance, the lights, sounds, and “near misses” are designed to keep you engaged — not to help you win. The house always has the edge, and most players walk away with less than they started.

Investing, on the other hand, offers long-term compounding interest and capital growth.

Investing may not offer the same instant thrill, but the more you grow it, the more it's worth, and the more exciting it gets. Watching your investments build over time, aligned with your goals and risk profile, is a thrill that lasts. It’s not about chasing luck in the moment – it’s about strategy, patience, and progress.

This outlines a financial comparison between gambling $500 annually on the Melbourne Cup and investing $500 annually over a 10-year period in the xtools Highly Aggressive Portfolio. The purpose is to provide a clear, illustrative example for compliance review, including assumptions, calculations, and disclaimers.

Assumptions

1. Gambling outcomes are based on estimated probabilities and payouts, not guaranteed results.
2. Scenario 1 assumes a single annual bet with a low probability of a high payout.
3. Scenario 1 assumes a $500 annual bet with a 5% chance of winning each year.
4. Scenario 2 assumes multiple smaller bets with moderate odds and smaller payouts.
5. Scenario 2 assumes $500 bet annually split into bets of $100 each with a 10% chance of winning.
6. Investing scenario assumes $500 invested annually in the xtools Highly Aggressive profile.
7. Time horizon for the three scenarios is 10 years.
8. Post 2 considers the odds of winning a trifecta; 1 in 12,144, which is just 0.0082%

Calculations

Gambling Scenario 1

• Assumption: $500 bet annually with a 5% chance of winning $500 each year.
• Total spent over 10 years: $5,000
• Expected return: 0.05 × $500 × 10 = $250
• Net result: $250 - $5,000 = -$4,750

Gambling Scenario 2

• Assumption: $500 bet annually split into 5 bets of $100 each.
• Each bet has a 10% chance of winning.
• Total spent over 10 years: $5,000
• This reflects smaller bets placed at moderate odds, such as betting on horses to place or win with odds around 9/1 or 10/1.
• Expected return per bet: 0.10 × $100 = $10
• Expected return per year: $10 × 5 = $50
• Expected return over 10 years: $50 × 10 = $500
• Net result: $500 - $5,000 = -$4,500

Investing Scenario

• Total Amount Invested Over 10 Years: $500 x 10 = $5,000
• Projection period = 10 years
• Initial amount = $500
• Regular savings = $500
• Future Value ≈ $7,794
• Net Gain: $7,391.80 - $5,000 = $2,794

Dona Edwards

Financial Adviser, IFS – Supporting Incolink Members

Issued by Industry Fund Services Limited (AFSL 232514) (IFS) | phone 1300 680 821.

Written by Dona Edwards (AR 1262208) | 1 Pelham Street, Carlton VIC 3053 | phone 0459 758 637. Dona is an authorised representative of IFS.

General advice only. Does not consider your personal circumstances. Consider if the advice is appropriate before acting on it and read the relevant product disclosure statement.

IFS and Incolink have entered into an agreement for IFS to provide financial advisory services to Incolink and its members.