Yotta Savings Expected Annual Percentage Yield (APY)

Yotta Savings offers an innovative FDIC-insured savings account that also functions as a no risk lottery. For each $25 dollars they deposit up to their first $25k, a customer receives 1 ticket which is entered into a weekly drawing that can earn anywhere between $.10 to $10M, modeled after the PowerBall. Should you save your money there?

For savvy savers who don’t particularly care about the lottery aspect, only two questions are relevant: (1) what is their expected annual percentage yield (APY), and (2) ignoring the big prizes that are unlikely to happen, what is the expected APY considering only the “base” prizes that can be won with a reasonable chance. Perhaps surprisingly, as of January 2021 this expected APY is quite high, at 2.19% overall and 1.85% considering only the base prizes. This is far better than even the best online banks such as Marcus which only yields 0.5%, and above government bond yields which are effectively zero. Since the account is FDIC-insured and has all the features other online savings accounts have, it is a fantastic option for a savings account right now.

Detailed calculations of the APY is shown below. If you find my analysis useful, feel free to use my referral code: DAVID1503 and you’ll get 100 free tickets. The lottery aspect turned out to be quite fun even though the expected APY alone justified my decision to put money there. You can download the app here: Yotta Savings.

Detailed analysis

First, Yotta offers a 0.2% savings bonus that is guaranteed. The expected value of tickets add to that. Based on current odds, I compute the expected value of each ticket as follows. The expected value of prizes below $1000 can be found by multiplying the odds by the prize amount. Above $1000, prizes may be split. The expected value in this table accounts for the split, but the differences are relatively minor.

PrizeOddsExpected Value (¢/ticket)
$0.101:1100.091
$0.151:1810.083
$0.251:1600.156
$0.601:8670.069
$71:99130.071
$101:44060.227
$10001:273,1580.019
$15001:346,9550.028
$50001:21,511,2160.021
$37,990 (Tesla)1:133,230,7590.028
$5,800,000 (Jackpot)1:8,260,307,0550.070
Total0.862

What is the more “likely” APY, ignoring the extremely unlikely outcomes such as winning the jackpot? To answer this question, consider someone who saves $25k and gets 1,000 tickets per week. The chances of winning at least once per week and once per year is shown in the Table below. As can be seen from the Table, prizes up to $10 are quite likely, while prizes above $10 are less likely.

PrizeWin at least once per weekWin at least once per year
$0.1099.99%100.00%
$0.1599.61%100.00%
$0.2599.81%100.00%
$0.6068.48%100.00%
$79.60%99.47%
$1020.31%100.00%
$10000.37%17.33%
$15000.29%13.92%
$50000.005%0.241%
$37,990 aka Tesla0.0008%0.0390%
5,800,000 aka Jackpot0.0000%0.0006%

Finally, we can convert the expected values to the expected APY, and results are shown in the Table below.

Expected APY
savings bonus (guaranteed)0.20%
with prizes up to $101.85%
with all prizes2.19%

You can download the app here: Yotta Savings. Again, if you found my analysis useful, feel free to use my referral code: DAVID1503 for 100 free tickets. Even though I ignored the lottery aspect in making the decision to save there, it turned out to be surprisingly fun. Hope you enjoy the app as much as I do!

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