There are many times in life when the odds are simply stacked against you. Usually there's not a lot you can do, but it's worth knowing just how the odds are balanced and what you can do to try and combat them.

Gambling

Gambling is one area when the odds are always against you. Gambling games work by giving you a one in x chance of winning y times your stake, x is always higher than y and it is this difference that gives the bookies their house cut. For instance, if you were offered five times your money for rolling a six on a dice, the probability of you winning would be less than the odds offered on the stake, and so the house cut would be 1/6. Usually, this margin is hidden, with the game designed to make the chance of winning look easier, so that the odds appear to be in your favour. Fairgrounds are kings at this, with heavy tins needing to be knocked over by light balls and easy targets made out of hard materials so that balls bounce out.

The National Lottery (or 'Lotto' as it's currently known¹), is the biggest gambling game in the UK, played by the most people. As with any other gambling game, the odds are strongly stacked against you. It doesn't matter what numbers you choose in what frequency, you are always statistically likely to lose money in proportion to the amount you spend. Despite this fact, however, people are always coming up with theories about how to improve their chances of winning the lottery. And they all fail. Apart from, that is, this Researcher's method, which completely solves the problem of losing at the lottery, and reverses the odds. What's more, he's not a selfish person, and so he's going to let you in on the fool-proof method...

Reversing the Odds on the Lottery

Okay, the first thing you need to do is find a tin or suitable pot that you're going to use as the kitty. Next, go and get some of those red lottery forms. Alternatively use a scrap of paper. Find a pencil and get your wallet handy, we're getting ready to beat those odds.

The next step on this way to winning is to decide how much you're going to bet. It's a good idea to spend the same amount you'd normally spend on the lottery, but as we're reversing the odds, the more you bet, the more you win, so feel free to gamble as much as you like. For each pound that you spend, you're going to have to choose a set of numbers. You can do this using whatever method you like, it really doesn't matter, the lottery's random, remember. Once you've got all your stake together with the lottery slips, place it all in the tin, and put it on your mantelpiece. Now wait till Saturday, sit back and dream of success.

Saturday's come and that tin is still in your house. It's not going anywhere. Turn the TV on to BBC1 and wait for those balls to drop. When the numbers have come up, jot them down on a scrap of paper and return to your tin to see what you have won!

Here's how to calculate your winnings. For each set of numbers that didn't come up, congratulations! You've won a pound! Do this often enough and you'll have saved yourself a fortune. If all your numbers do come up, you've lost a potential few million, which is a shame, but remember, the odds are strongly stacked in your favour!

Insurance

Insurance is based around the principle that you pay a company or person to insure you against a potential risk, be this death, theft or some freak accident. Insurance companies make their money by calculating as precisely as possible the level of risks faced, and charging the customer slightly more than these odds. Like gambling operators, they are working with a house cut².

Insurance companies offer, potentially, to save you money rather than win you money, but the principle is the same. Overall, you're statistically likely to lose money, and it's important to understand this. However, it can sometimes be worth spending money in order to avoid a situation where you really will be completely stuck, such as if your house burns down. As odds are more difficult to calculate than simply gambling on numbers, it's not easy to work out exactly how much you are paying for this service. The level of cover you are paying for and the price you're paying all go into the equation as well as the likelihood of your needing to claim. Often, insurance is unavoidable, and you simply have to find the best deal. There is, however, a way to beat the odds in some circumstances.

Beating the Insurance Odds

This is very simple. Don't insure yourself for anything you can afford to replace yourself. Use your savings account instead. You're reversing the odds because you're saving yourself the money you'd pay on insurance, with only a small chance of having to pay out. This may seem counter-intuitive, especially for things where you expect the risk to be high, such as insuring a mobile phone against theft. Remember though, that the insurance companies are better at calculating the odds than you are, and if the risk is high, so will the price of insurance be high. If you don't insure yourself for risks you can afford to take without bankrupting yourself, over your lifetime you are likely to save yourself a lot of money.

The Stock Market

The stock market is another place that has been likened to gambling. The idea of the stock market is that you lend someone your money, they use it to try and build a profitable company, increasing the value of your share. This practice is fairly unethical, as in effect you are making money from other people's labours by simply being rich enough to have money to give away (and shouldering some of the risk). The risk involved is that it's possible for the shares to go down as well as up. Unlike gambling, though, the odds aren't fixed against you, and indeed as long as the economy is doing well you are odds-on to make money. There's no way of guaranteeing this, though.

Winning at the Stock Market

There is one sure-fire way of making money on the stock market. Instead of buying shares directly, give your money to a bank. The bank will invest your money in the stock market on your behalf, and give you a guaranteed return. Of course, the bank is taking a risk as well, but it has a bigger kitty than you and can spread its money widely³. The bank, of course, make money from this, and will cream off some the profits made for itself. The potential amount of money you could earn is reduced dramatically, but the risk element is taken away (at least partially - depending on the type of account).