If you win the lottery...

Page 2 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.
Toggle sidebar Toggle sidebar
D

DurocShark

Lifer
Apr 18, 2001
15,708
5
56
I'd rather get it all at once. I know you end up with like 1/3 of the total amount (after taxes and such), but I'd rather have the opportunity to invest myself. With larger amounts, you can leverage that money and make even more. :D

BTW: I'm winning the CA state lottery tonight, so don't bother. :p
 
anxi80

anxi80

Lifer
Jul 7, 2002
12,294
2
0
Originally posted by: DurocShark
I'd rather get it all at once. I know you end up with like 1/3 of the total amount (after taxes and such), but I'd rather have the opportunity to invest myself. With larger amounts, you can leverage that money and make even more. :D

BTW: I'm winning the CA state lottery tonight, so don't bother. :p
Click to expand...
that $10 million is mine!! but dont worry Duroc, if i win, ill pay for the chrome job, k? :D
 
DrPizza

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
49,601
166
111
www.slatebrookfarm.com
Lump sum. First purchase: Fake money they use in movies. First deed: Burning the fake money, screaming at people to leave me the hell alone, I'm broke now. :)
 
P

prvteye2003

Diamond Member
Jun 19, 2003
3,876
1
0
Originally posted by: Storm
Who wouldn't want to take a lump sum? Someone who can't control themselves when spending money?
Click to expand...

That has nothing to do with it. How about you would be GIVING them over HALF of what you won.
 
Y

Yax

Platinum Member
Feb 11, 2003
2,866
0
0
If you take the payments, then you can have a tax write off every year from the amount the government withholds. Being that you can write off gambling losses up to the amount you win, I'd take the payments and become a professional gambler. Just write off the amount I lose so the government can't take that from me. At least, that way, I'd have a chance to win with the money instead of giving it away.
 
R

royaldank

Diamond Member
Apr 19, 2001
5,440
0
0
Lump Sum. First purchase, a Golden Tee machine. Next would probably be an XBOX and new computer. Got a car and house, so I don't need either of those.
 
S

shopbruin

Diamond Member
Jul 12, 2000
5,817
0
0
Originally posted by: ATLien247
I've always wondered which method of payout is best...

You get more money if you take the payments, right?

So what's the benefit of taking the lump sum? Are the payments not insured or guaranteed? Do they take out less taxes with the lump sum?
Click to expand...

i think its more of, the money is worth now and may possibly and probably will be worth less in the future. it is better to take ALL of it now and invest a good chunk of it now, for a better payoff in the future.

i'd take the lump sum, divy it up, put in funds, stocks, and other places i can invest it in, and live off the interest.

of course, after my car buying spree. :D
 
S

ssmithBH

Member
Jun 4, 2002
66
0
0
It depends upon prevailing interest rates.

The amount you get from lump sum is based on the amount of money the lottery would have to invest in US government securities with a guaranteed payment that would mature on the annual payment dates of the multiple year payout. That is effectively the net present value of the future payment stream at the prevailing interest rate.

If the prevailing interest rate is low (like now), take the lump sum as you would get the highest present value. If prevailing interest rates were high (e.g., like in 1980), then take the payments so that you invest some of the money at better rates later (rather than taking the hit up front for the high prevailing rates (lower present value)). Currrent and future tax rates also impact your decision, but who knows what can happen with future tax rates (other than going up?).

Third issue to consider is: if you take payments and die before the full amount is collected, can the uncollected payments be willed to your heirs? If not (and in many states it is NOT), take that into consideration.

Remembering that the lottery is ENTERTAINMENT ONLY (one of the worst "investments" ever), I think that in most cases you should take lump sum.
 
K

Kenny

Platinum Member
Oct 12, 2002
2,567
0
76
Lump sum and play with some mutual funds, maybe start a small business.
 
DT4K

DT4K

Diamond Member
Jan 21, 2002
6,944
3
81
Originally posted by: prvteye2003
Originally posted by: Storm
Who wouldn't want to take a lump sum? Someone who can't control themselves when spending money?
Click to expand...

That has nothing to do with it. How about you would be GIVING them over HALF of what you won.
Click to expand...
Not true at all.
Very common misconception though.
Good explanation below.

Originally posted by: ssmithBH
It depends upon prevailing interest rates.

The amount you get from lump sum is based on the amount of money the lottery would have to invest in US government securities with a guaranteed payment that would mature on the annual payment dates of the multiple year payout. That is effectively the net present value of the future payment stream at the prevailing interest rate.

If the prevailing interest rate is low (like now), take the lump sum as you would get the highest present value. If prevailing interest rates were high (e.g., like in 1980), then take the payments so that you invest some of the money at better rates later (rather than taking the hit up front for the high prevailing rates (lower present value)). Currrent and future tax rates also impact your decision, but who knows what can happen with future tax rates (other than going up?).

Third issue to consider is: if you take payments and die before the full amount is collected, can the uncollected payments be willed to your heirs? If not (and in many states it is NOT), take that into consideration.

Remembering that the lottery is ENTERTAINMENT ONLY (one of the worst "investments" ever), I think that in most cases you should take lump sum.
Click to expand...

 
ElFenix

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,374
8,499
126
Originally posted by: ATLien247
I've always wondered which method of payout is best...

You get more money if you take the payments, right?

So what's the benefit of taking the lump sum? Are the payments not insured or guaranteed? Do they take out less taxes with the lump sum?
Click to expand...

i think the PDV is similar, right. with the lump you could put it all in index funds and have a much higher pdv.
 
You must log in or register to reply here.

TRENDING THREADS

COMPANY
RESOURCES
FOLLOW
Top Bottom