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Smart Lottery winner

JEDI

JEDI

Lifer
CNN

"if I'd have taken a lump sum, I'd be broke again within five years," she said.

wow.. that's really amazing that she knew her weakness in spending, *AND* acted to minimize that weakness.
 
I'd take the lump sum and head straight to a financial adviser/investment broker.

So where do you safely keep $50 million while you are sorting out long-term solutions? Just deposit the check at your local bank? What about the FDIC $100,000 limit? An issue or not?
 
Originally posted by: yllus
Lump sum's a better deal if you have self-discipline worth a damn, IIRC.
Click to expand...

Yeah I've heard that, too. But if you don't have any self-discipline, then by all means, take "less" money for an extended period of time.
 
Originally posted by: cKGunslinger
I'd take the lump sum and head straight to a financial adviser/investment broker.

So where do you safely keep $50 million while you are sorting out long-term solutions? Just deposit the check at your local bank? What about the FDIC $100,000 limit? An issue or not?
Click to expand...
Government bonds, low risk mutual funds, etc. There's no compelling reason to take risks on that much money, so as long as you can guarantee a 1% rate of return, you could live off the interest for the rest of your life.
 
On a twenty year payout, taking the annuity would have you getting more money in about 13 years (with interest factored in) than taking the lump sum. Always take the annuity unless you don't think you will live to see all of the payments.
 
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
 
Originally posted by: Atheus
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
Click to expand...

Probably, but for the state, not for the winner.
 
Originally posted by: Atheus
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
Click to expand...

It does accrue interest - that's why the annuity is a "higher" payout than the lump sum. They just take the lump sum and put it in an annuity for you.

Of course, there's nothing preventing someone who takes the annuity from cashing out early - she could still screw herself over.
 
Originally posted by: mugs
Originally posted by: Atheus
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
Click to expand...

It does accrue interest - that's why the annuity is a "higher" payout than the lump sum. They just take the lump sum and put it in an annuity for you.

Of course, there's nothing preventing someone who takes the annuity from cashing out early - she could still screw herself over.
Click to expand...

Schneider, 32, opted for 20 yearly payments of $50,000, or $34,500 after taxes.

How is that "higher?" It just means the state doesn't have to front $1M all at once, they can just put up like $600K and earn interest on it over 20 years in order to pay her, no?
 
Originally posted by: cKGunslinger
Originally posted by: mugs
Originally posted by: Atheus
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
Click to expand...

It does accrue interest - that's why the annuity is a "higher" payout than the lump sum. They just take the lump sum and put it in an annuity for you.

Of course, there's nothing preventing someone who takes the annuity from cashing out early - she could still screw herself over.
Click to expand...

Schneider, 32, opted for 20 yearly payments of $50,000, or $34,500 after taxes.

How is that "higher?" It just means the state doesn't have to front $1M all at once, they can just put up like $600K and earn interest on it over 20 years in order to pay her, no?
Click to expand...

The 1M prize advertised is always the annuity value, not the lump sum.
 
9 maxed out credit cards?

Since it seems that she has a knack for spending money, she can still be "broke" within the next 5 years anyway, thanks to debt spending. She'd just have spend the money before she got the checks from the government.
 
Originally posted by: newb111
Originally posted by: cKGunslinger
Originally posted by: mugs
Originally posted by: Atheus
Does it earn interest while it's sitting and waiting to be payed out? If not you'd be better taking most of it to a bank and telling them to put it somewhere really difficult to access.
Click to expand...

It does accrue interest - that's why the annuity is a "higher" payout than the lump sum. They just take the lump sum and put it in an annuity for you.

Of course, there's nothing preventing someone who takes the annuity from cashing out early - she could still screw herself over.
Click to expand...

Schneider, 32, opted for 20 yearly payments of $50,000, or $34,500 after taxes.

How is that "higher?" It just means the state doesn't have to front $1M all at once, they can just put up like $600K and earn interest on it over 20 years in order to pay her, no?
Click to expand...

The 1M prize advertised is always the annuity value, not the lump sum.
Click to expand...

Right.
 
Originally posted by: cKGunslinger
I'd take the lump sum and head straight to a financial adviser/investment broker.

So where do you safely keep $50 million while you are sorting out long-term solutions? Just deposit the check at your local bank? What about the FDIC $100,000 limit? An issue or not?
Click to expand...

I asked this question and nobody could answer me. Imagine how much of a hassle it is to distribute your 100M amongst 1,000 banks. Most of the answers I got where: Rich people don't have all their money in cash, it's in assets so this is not a concern. That doesn't answer the lottery question though.
 
Originally posted by: sygyzy
Originally posted by: cKGunslinger
I'd take the lump sum and head straight to a financial adviser/investment broker.

So where do you safely keep $50 million while you are sorting out long-term solutions? Just deposit the check at your local bank? What about the FDIC $100,000 limit? An issue or not?
Click to expand...

I asked this question and nobody could answer me. Imagine how much of a hassle it is to distribute your 100M amongst 1,000 banks. Most of the answers I got where: Rich people don't have all their money in cash, it's in assets so this is not a concern. That doesn't answer the lottery question though.
Click to expand...

The FDIC limit only matters if the bank collapses. I don't believe that is a common occurrence these days. Spread it between a few large banks and you should be fine.
 
She would have been better off taking the lump sum.

She's getting $34,500 a year for 20 years. So basically, she's getting 69% of her payout after taxes.

If she would have taken a lump sum she would have gotten $690,000.00 (69% of 1 milllion). If she were to invest that $690,000 and get a modest return of 6% a year she would make $41,400 in the first year just off the interest. That is more than she would have gotten from her annuity payment and she would still have her $690,000 nest egg continually earning interest for her.

And the best part, with compound interest that nest egg will grow substantially over the next 20 years and the interest she could make on it would easily outpace inflation.

Am I wrong?
 
Originally posted by: RaistlinZ
She would have been better off taking the lump sum.

She's getting $34,500 a year for 20 years. So basically, she's getting 69% of her payout after taxes.

If she would have taken a lump sum she would have gotten $690,000.00 (69% of 1 milllion). If she were to invest that $690,000 and get a modest return of 6% a year she would make $41,400 in the first year just off the interest. That is more than she would have gotten from her annuity payment and she would still have her $690,000 nest egg continually earning interest for her.

And the best part, with compound interest that nest egg will grow substantially over the next 20 years and the interest she could make on it would easily outpace inflation.

Am I wrong?
Click to expand...

If she took the lump sum it would be taxed at a higher rate because she got it all in one year (someone correct me if I'm wrong on that). On a larger jackpot that's not the case, because you're in the higher tax bracket with the annuity too.

I don't feel like doing the math, but you're probably right that she'd still come out ahead with good investments. Of course, that requires self control which she admits she doesn't have (and the 9 maxed out credit cards back that up).
 
Originally posted by: RaistlinZ
She would have been better off taking the lump sum.

She's getting $34,500 a year for 20 years. So basically, she's getting 69% of her payout after taxes.

If she would have taken a lump sum she would have gotten $690,000.00 (69% of 1 milllion). If she were to invest that $690,000 and get a modest return of 6% a year she would make $41,400 in the first year just off the interest. That is more than she would have gotten from her annuity payment and she would still have her $690,000 nest egg continually earning interest for her.

And the best part, with compound interest that nest egg will grow substantially over the next 20 years and the interest she could make on it would easily outpace inflation.

Am I wrong?
Click to expand...

You get less if you take the lump sum and you get taxed more. However, I still agree with you that you could make a lot more money if you take the lump sum and invest it.
 
It's actually better to take the lump sum so you can start building interest equity.... you're actually losing a lot of money by taking it in payments... I think.
 
The first thing you do when you get a fat jackpot like 50 million is to hire a financial planner. Don't fvck up. But 1 million.. ehh... that's not even half the cost of my house >.< I would take that 690k out fast and pay out the mortgage because clearly when my parents retire, I still have a mortgage to deal with.
 
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