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this is assuming that the govt wont eff you, change the rules, etc. If I won that kind of money, I'd be GONE and eff the IRS. there's no need at all to invest 6 mill. Just put it into gold coins, that's 60k per year for 100 yrs. More likely, 100k per year for 60 years, of course. with gold protecting you from inflation, and not being in the Us, you'll have a very nice life on 100k per year.
Old thread but it's always nice to muse about what people would do with a BIIIIG lottery win.....
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Ok, lets re-run the numbers..... the Mega Million lottery is 20 million dollars, you win, take the lump sum, you end up with $14,600,000 before taxes. ... the highest Federal tax bracket is 35%, but now the state wants a portion of that cash too. (at least in NJ), so Federal plus 11% for state equals 46%, you end up with $7,884,000. I on the other hand, end up with $540,000 a year or a total of $10,800,000 over 20 years.
You need to earn 1.9% interest over 20 years to equal my $10,800,000 over 20 years (including taxes) just to break even with me. Now if I invested my money at 1.9% interest, I'd have 14 million dollars, you would now have to earn 2.9% interest to equal me.
The same theory applies, if you can earn more interest on $7.8 million, why can I earn more interest in $540k?
I don't need to be greedy. If I'm happy with my numbers. I don't care the you "end up with more."
My $7,884,000 is more than enough for me and my kin.
I don't care that you end up with $540,000 a year or a total of $10,800,000 over 20 years.
I also don't care that I might need to earn 1.9% interest over 20 years to equal your $10,800,000 over 20 years (including taxes) just to break even with you.
Nor do I care that if you invested my money at 1.9% interest, you'd have 14 million dollars, and I'd have to earn 2.9% interest to equal me.
It's not like investing it'd be hard to get 1.9, or 2.9% gain. And you can get more than 2% in the right CDs.
So for me, my lump sum versus your annuity?.....I personally wouldn't care about you, as long as my 8 million is more than enough for me. I don't need to keep up with you and DJT, and Billy Gates, and Jeff B, and Warren B.
If I just put it in my mattress and never earned a dime on any of it -- it would STILL be enough.
(That is, enough to take care of my immediate family, their homes, their children's educations, and all their debts. Once that's done I wouldn't feel the need to make sure no one in the family would never have to work again, forever amen. I don't know that I want two and three generations of the family to never have to work and earn their way. That can lead to people just being parasites and leeches, ne'er-do-wells, and people who can't do a thing for themselves. It doesn't HAVE to lead to that. But it can.)
Me, too. At 77 years of age, I have no interest in a 26 year annuity. I'm sure I won't live that long.
Of course, those of us who seldom, if ever, buy lottery tickets don't have to concern ourselves with what to do with out winnings. If ya don't buy the tickets, ya ain't gonna win!
The only reason, and the only main reason why I would take payments is because, dealing with $6M in one shot is not easy.
However dealing with 600k for the first year will help you align your lifestyle, it;ll help you understand the reality of the situation and it'll help you spend some time over how to spend the money.
If I had a 600k/yr lottery for 20 yrs.
I'd "probably" retain my job, atleast for the first yr or so.
Start looking at various business options based on the fact that I can put forward about $450k in downpayment. The rest $150k goes into a savings account. Yes, my lifestyle will change, but slowly. It'll gain a direction which I would have spent serious time upon.
The first 5 years, I'd start 5 new businesses. It could be 5 pizza shops. It could be 2 gas stations and 3 ice cream shops.
Diversify. Different locations. Will delegate a lot of supervising positions.
If I end up with $6M, I'll end up buying a house for $3M. and couple expensive cars for another 1M and spend a lot of money on useless exotic vacations.
Dealing with $6M doesn't seem like a problem to me. $6M is NOT really that much. No way I would buy a $3M house or expensive cars. I'd pay off all my debt, pay off my kids' debt/mortgages/student loans, buy maybe a $500,000 house and invest the rest.
If I were younger, I wouldn't think $6M was enough money for me to quit my job. But since I'm near retirement age anyway, I would go ahead and retire.
The only reason, and the only main reason why I would take payments is because, dealing with $6M in one shot is not easy.
Why would it not be easy?
I'd take the lump sum and sit on it.
It's only "not easy" because most people today can't think outside of something called "a box" and have let others train them into believing it isn't. Since they can't think outside of this thing called "a box", they make it into something it isn't, like rocket science.
Can't say my lifestyle would change much, if any. Why would it need to? Same job, pad, car, irritating relatives etc. as always, the only difference is the SHTF fund would be much bigger. KISS principle.
Depends on the lump sum vs. payment schedule assumptions (amortization length, implied money factor (discount rate)).
Also would need to know the absolute amount in $ as well as the other assumption (age, state/federal tax implications, etc..).
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