How to Bet on the Kentucky Derby Without Gambling Away Your Future
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"People spend a lot of time and effort figuring out which horse is going to win the Kentucky Derby,” Tim Sullivan says. “But if they invested that time into their retirement plan, they'd do a lot better."

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The Kentucky Derby is known as the most exciting two minutes in sports. If you’re caught up in the thrill, go ahead and bet on your favorite—but limit yourself to a set amount you know you can lose, and remember that overwhelmingly your money will do better in investments.

In 2018, people wagered $225.7 million on Derby Day races, including $149.9 million on the headliner race itself. With a field of 19 horses as of late day Friday, your odds of picking the winner this year is about 5%, although the potential payout varies greatly between favorites and long shots.

You may not fancy yourself a gambler—or have any interest in horse racing—but it can be easy to get swept up in the excitement and the lure of making a quick buck. Joe Lum, a certified financial planner at Intersect Capital in San Ramon, California, knows this from experience.

Lum went to the Derby last year and accidentally placed an incorrect bet early in the day that turned out to be a winner, which in turn made him overconfident in his horse-picking prowess. “That was my first bet of the day, and I didn’t win again,” Lum recalls.

Here’s why you may want to consider using the bulk of your money—and your attention—to bet on yourself instead of the race:

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‘People need to be more patient’

It can feel difficult to be patient in a world that caters to instant gratification—and that’s especially true when deciding what to do with your money. People can spend just a few minutes deciding how to bet on the Kentucky Derby and wait all of two minutes more to see if they’re a winner. But you can’t get the same immediate results with investing, Lum says.

“People choose to bet on something rather than invest because it seems a lot less labor intensive,” he says. Figuring out what’s happening in the stock market or how to invest your money “seems like a much more difficult scenario”—and you may have to wait months to see meaningful returns on investments, he adds.

But your odds of consistently winning when gambling are slim, at best, whereas regularly investing money in the stock market is a proven long-term bet, says Tim Sullivan, chief executive officer of Strategic Wealth Advisors Group in Shelby Township, Michigan.

“People spend a lot of time and effort figuring out which horse is going to win the Kentucky Derby,” Sullivan says. “But if they invested that time into their retirement plan, they’d do a lot better.

“People need to be more patient, that’s the biggest thing,” he says.

Boosting your retirement contributions by just 1%—an extra $500 a year for someone making $50,000—could grow to nearly $83,000 over a 40-year career.

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Celebrate some wins along the way

Most of us will never be in the winner’s circle at Churchill Downs, so it’s important to dream up your equivalent—like retiring early or saving up to buy a home.

Keeping perspective on your long-term goals can help you stay on track, Sullivan says. Sullivan recently met with a 30-year-old client who wanted to cash in an IRA to pay off $30,000 in debt—but doing so would’ve “set him back drastically” in his goal to retire by the age of 62.

Because those kinds of big goals are often years away, Lum says it’s important to build in some short-term milestones. Celebrate achievements like paying off student loans or credit card debt. “People need some positive feedback,” he says.

Connecting those short-term wins with your long-term goals can also help you reason to say no to impulses—something Lum says he’ll be keeping in mind when he heads to Louisville again this weekend. “Gambling is not an investment strategy.”

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