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Unless it's one of those "For Life" payouts I'd take the lump sum no questions asked. Get Uncle Sam off my back and get it over with. Not like I'm gonna splurge the whole thing afterwards.
Tax rates could always go up. (The government has to make up deficits somehow.) That’s one of the reasons we still contribute the Roth 401k, even though we’re already in an “ugly” tax bracket. I’d take the lump sum.
For whatever reasons, most people seem absolutely horrible about managing money, especially large amounts of it. I think one of the biggest challenges even if you are smart about it is who to trust. You need a financial advisor and ideally a small team of people you trust, who can counterbalance each other, so that not just one person invests in some risky thing and blows a bunch of your money. There are good, safe ways to invest large amounts of money, though, and they don't even have to be boring, though that works too.
The key is the same with $100M as it is with $1M, though you just have a few more options in your arsenal. I'm no financial advisor, I can't say the exact allocation that makes sense, but for instance if you had $100M and you kept about $10-15M in cash or cash equivalents, CDs or something like that, then you put some money in index funds, maybe another $20M, for me I would go light on those two and I'd be investing in real estate. There are a ton of opportunities out there and if you have that kind of money, you can get access to them. Investments like hotels, apartment buildings, downtown high rises, senior apartments, office complexes, etc. You don't have to be the main or sole investor, putting $20M into one apartment building, you can find developers who need to raise outside investor funds and put $500K here, $1M there, and these deals often have excellent rates of return, well in excess of what you'd get from a general stock fund. You also are spreading out your risk to a much greater number of investments, but without them all being pie-in-the-sky nonsense. The thing is, they are maybe not "exciting" investments, so people instead decide to do things to fill their own ego, like invest in their friend's risky tech / app company for $5M, their other friend wants to launch a shoe company, there goes $2M, and they want a nightclub with their name on it, there goes $7M.
People also are generous in stupid ways. If I won the lottery I wouldn't give a dime to anyone else. My friends are all well off, my dad is wealthy, and relatives asking for money is tacky and just would make me think they were money grubbing. I don't have that many people close to me. I think I'd buy nice gifts for my friends, because it'd be fun, but not just directly give anyone a bunch of money. When some people win the lottery, they give away money to like 26 different people, sometimes a lot, and pretty soon most of their money is just gone.
How some of these people manage to blow through $100M+ though, I honestly have no idea, because presumably even if you bought houses with your money, the asset has value, you're not "blowing" the money, there's still something left that has value with what you spent. It's baffling that anyone could find a way to lose so much money.
I didn't see mentions of this previously in the topic.. So.. These are questions more than anything.
What happens if you die? let's say you hit the lottery, you take the lump sum, you have $200M after taxes. It hits your bank account. You decide to try that new-fangled heroin you've heard so much about.. Boom, dead. You've left everything to your only child. Will the child have to pay estate taxes on it, after you've already paid your taxes on it? I would think, yes.
If you took the annuity.. same situation as above. You got the first $10M payout, you've paid the taxes. Your heir would have to pay estate taxes on that, but.. First, would they inherit the remaining money? I'm thinking yes? And, if they did, at that point, they'd only have to pay their taxes on that money, not estate taxes, correct?
My opinion.. Annuity is the way to go, pending on a few things. First, every one of us sits here and says how we'll be smart with the money. Yeah, that's what every lottery winner in the past has said. Look how most of them end up. At least with the annuity, you have a chance of learning your lesson.. However.. Probably not because you'd probably be able to take out loans against the annuity.. So.. Huh.. Yeah.. Don't know.
If I won 900 million dollars -- and let just for argument's sake -- and to keep the math easy -- say the lump sum aftertax is 250 million.
1) I could put it under my mattress and never run out of money -- so I certainly see no need for complicated investments, buying businesses, investing in real estate or any of that. My money can work for me in lots of ways without all that. a) I want to be vacationing not running an empire, b) I wouldn't trust anyone else to run my finances, so it would fall to me to manage everything.
2) Heck, yeah, I'd give some of it away. A lot of it in fact. I have about 50 people: relatives friends and acquaintances of varying degrees -- various amounts of money. A family education fund would be set up. But also for example, siblings (there are 3) would get ALL debts paid off, nieces and nephews would get educations paid for, some of them might get new cars others might get money for home repairs...whatever. Perhaps I'd set up some trust funds. Friends and acquaintances would get some -- not enough to retire on, but certainly at least 25K or so. And taxes might have to come out of those amounts dues to gift taxes and there's also the lifetime gift amount. We'd work with and around that when possible.
That's probably why I shouldn't be playing the lottery, because I literally don't know anyone close to me with debts or who needs the money, so I can't see why I'd give them any money lol. I did play both this week, though, and I'll buy tickets tomorrow for them both again, just for fun. I only spend a few bucks and I almost exclusively play the lottery when it's one of the 10 biggest of all time in this country or 10 biggest for that specific lottery (Mega Millions / Powerball). I sometimes will play if I happen to think of it any time the amount is more than $300M, below that, nah. The math is bad any way you slice it, but it gets better the higher it goes, so it makes a little more sense.
I would definitely want an empire if I won that kind of money, and I wouldn't mind being involved managing it. If I won $350M after taxes and lump sum, like this Mega Millions, I'd want to turn that into $1B down the road. I can understand why most people don't really care, but I'm a filmmaker, there is no such thing as "too much money" or "enough money" when one movie can cost $200 million. The more I had, the more ambitious I'd be. If I had $100M, I'd be financing $2-5M movies, if I had $1B I'd be financing $20-50M movies, and if I had $10B I'd be financing $100M movies, and if I had $100B I'd buy a major studio or something :P
That's probably why I shouldn't be playing the lottery, because I literally don't know anyone close to me with debts or who needs the money,
Hi Jonathan, I'm Kara. LOL
No, really, that's kind of amazing that you don't know people in other financial situations.
We've made our lottery to do list, paying off our debts, giving anonymously in modest amounts to a long list of people, charities and churches, expanding our business and hiring more employees.
We've always told our kids that if we win, we won't tell you and I think that's still allowed in our state.
Fun to think about, when it gets this large. I'll probably buy $10-20 in tickets today. I do that maybe every few years for the big jackpots, because Hope is worth it. I don't need it, life will be fine if I don't win. I fear for those who think they actually will, that's stupid.
I'd take lump sum. So, let's say it's a third, call it $200M for a massive jackpot.
Yes, people are bad at managing money, especially those who didn't earn it. I earned most of mine, inheriting a good 'seed' that I doubled-down and will continue to nurture and grow. I pissed away maybe 10% on cars and broads, and will continue to do so. In fact I live well but not extravagantly, and within my means.
Back to Lotto fantasy, then, I'll cheat and tell the truth: after trying not to have a heart attack, I'd put the ticket on my desk and put a bowl over it. In the freak chance one of the cats jumped on it, or a drink spilled, or Leprechauns came out and ripped it off. I can see me doing this (chuckle)...no, then I'd probably take the bowl and put in in my safe. It's a safe safe, we might say, resistant to all comers including fire for at least a half hour!
I'd probably go to church right then, and pray an hour or so, finding some guidance from the Almighty or my own heart. Not much difference. I'd make a note to donate more to the church, they do good works here in town.
Next, that day out of excitement, would start to fill the most important role of my new employees: a good lawyer. Someone for life, from a background used to dealing with sports-figure types, which is what I have become: an every-man who just had $200M air-dropped in. Or possibly an Ivy Leaguer in Savile Row suit from a prominent firm, though I would relate more to the former. They'd need to keep me out of trouble, for life, as my go-between for very many things. I'm sophisticated, or rough, as need-be but grow exhausted dealing with BS: that's his(her) job. Bill rate irrelevant, obviously, part of the great new turn life just took.
I'd do some flying to interview these types, though those in my (current) hometown may have a preference. I do not know, though, if where I live now would be my forever home though I do like it in greater Seattle. Again, options just opened!
Once interviewed and selected, which would probably take a few weeks, s/he'd arrange my debut and the processing of the ticket in my name. Signing the back is a great first step, on Day 1. I'd have the lawyer handle all press or other news present, as-applicable. That person then becomes No. 1 smartphone contact, under #ICE_LAWYER in the address book.
So, then, here come my winnings...$200M, bank-to-bank.
Next I'd retain two to three major brokerages for my money, and split several ways. The portfolio managers would compete for my time, and share. This might also spread my risk of major fraud a little bit. I'd go Top 10, nationally. I'd love to give each of three $65M, and say, "thou are sent! Go forth, and make me money! We meet monthly to discuss your ideas and our progress!" I'd hold those monthly calls for life, or the lawyer would if I can't (or won't).
Next, a clever accountant. Taxation will be a big part of my world. He'd need to work with the lawyer and brokerages. I'd find one, with an excellent resume, somewhere nationally and include him on most financial "decisions."
I might shave off a million bucks to burn, or might not. After all, I should be making decent returns with diversified portfolios within a year or so, but wouldn't mind a little fun first. Probably trade in the GTS for a Turbo S or something I could take on a road trip, get my head on straight. Maybe even a Class B Airstream instead, with motorcycle on back. Pack a suitcase, and I'm on the road headed to CA for a few weeks at the Hilton...which one doesn't matter. Maybe all of them.
Job? Resigned. I'm retired, as of today. End of story, have a nice day. I neither hate nor love you, but we're done with the struggle and scheming, either short term or more likely permanently.
I could burn $25K staying at hotels and such in LA, San Diego, SF, etc. for awhile camped in a suite (or series). Or, maybe at campgrounds, or more probably a bit of both. I'd do plenty of writing and thinking. My lawyer would like some chats, during. I'd tire of that in a month or two and drive home. I like this house, bet I'd stay awhile! My friends would receive some quiet gifts; I'd think of something of each of maybe four for some amount not too extravagant. Just to show my appreciation.
After that, the trick is finding fulfillment in whatever I do for myself, and others. I have ideas, too broad for this long thread.
Well with the lottery @ $1BILLION, we bought just 2 tickets. Quick picks as quick picks tend to win more often than hand pucked numbers.
Dont play but on such occasions.
Ill let you know tomorrow how we make out.
Heck, id be happy to get the numbers to match to will the $1million in second prize.
If i win big i have 13 cousins, 14 of their kids, 3 great nephews and a nephew, and 4 very close friends ill all help out one way or another.
And id set up a foundation to help people in need.
Lol with a million, ill buy a used private jet and fky around here and there for a while. Lol.
Good luck to me and all who played this big jackpot....
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