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This is probably the best argument in support of taking the annual payments. In theory you can make a lot more by investing the lump sum, but in practice very few winners actually invest it as opposed to giving it away to family and friends and then blowing the rest.
If you as me are born and still live in a middle class culture. A few hundred million dollars would likely do more harm then good in the long run. It may sound crazy to you people but I would be happier if I won 1 million dollars vs 300 million dollars.
I have seen a couple of programs about mega million lottery winners.
The majority of these people went from being poor to living like royalty.It was alomost like the more money they won the worse their life turned out. Money was just thrown on luxury like they had unlimited supply. No talk about investing, saving, donating. More than half of them were bankrupt in no more than 6 years following their winnings.
I am happily married. I could sure use some extra money in my life. But not 300 million. If I won that kind of money I would give most of it away to charity's important to me.
I do know someone who won our state lottery a few years ago. About $7million before taxes. Our company controller,(CPA and all that), recommended he take the lump sum. Winner was about 55years of age and worked in our warehouse for about $8.50/hrly.
Based on the questionable accounting skills demonstrated here, best advice is summarized by Selhars:
---Don't tell anyone, keep acting like nothing happened, keep the ticket secure
-- Get GREAT, vetted lawyers (tax and estate), CPA, etc ( sorry FELIX C.. asking the company comptroller doesn't cut it). They
will take in to account your age ,health as well as spending proclivities and goals)
-- Think about a trust, to stay anonymous, if you can and lottery and your state rules allow it.
that is certainly one way to approach it. Once again I will post my advice. It may wind up resulting in the same outcome for you. As partly summarized by Selhars ( don't want to plagiarize):
---Don't tell anyone, keep acting like nothing happened, keep the ticket secure
-- Get GREAT, vetted lawyers (tax and estate), CPA, etc ( sorry FELIX C.. asking the company comptroller doesn't cut it). They
will take in to account your age ,health as well as spending proclivities and goals)
-- Think about a trust, to stay anonymous, if you can and lottery and your state rules allow it.
I used to muse about this issue: how I would choose, how I'd invest it (and who I'd give how much money to).
That is until a friend whose last nerve I'd apparently gotten on said -- idiot -- if you took the lump sum and put it in your mattress it'd still be more money than you'd ever make (and likely spend) in a lifetime -- so it doesn't MATTER what you do with it or how you receive it -- as long as you don't BLOW IT -- and start living like Donald Trump,
Ever since then I figured I'd go conservative, live off the interest and tap maybe a BIT of the principle.
Personally, I'd take the lump sum. But let me back up.
IF the annuity is inheritable, my TRUE preference would be to I take the payments spread out -- but in my case I want to give money away to family and friends, so for me, I'd rather take the lump sum give them their money and be done with that part of it. VERSUS, take the annuity payments and have to dole out their money to them over the years (because with the payments I wouldn't be getting enough to give them their total and keep enough for me)
A financial advisor I heard did point out that the annuity is easier to MANAGE. Getting 10 million at once, what do you do with it where to you put it. You can't put it in a bank, it won't all be insured. Even spreading it out you have to find a lot of places for 10 million or more....vs, say 500,000 a year.
Some other good advice from a website, if you win REALLY BIG:
-- DON"T tell anyone, keep acting like nothing happened, keep the ticket secure
-- Get good lawyers (tax and estate), CPA, etc
-- Think about a trust, to stay anonymous, if you can and lottery and your state rules allow it
-- Also, before you cash in the ticket -- IF you can pay all your bills a month or two ahead, leave your house, forward your mail (or have it held at the PO), and go to a hotel (just for the week or two after you claim the prize). (MAYBE think about disconnecting your phone for a bit) Lay low.
-- SEE if you've been able to stay anonymous. Have the media found you, or figured out who you are? Are you getting mail and phone calls from crazy folks begging for money, etc.
-- Once the initial period after your claim dies down....go back to living your life, and do what you want: move, stay where you were, quit your job, whatever.....
I think this is very good advise and that is exactly what I would do, although until the craziness died down I think I would take my kids to some tropical island and just lay low there for awhile. I'd take the lump sum, invest and set up a trust fund for each of my children.
OP.. aside from the fact that your assumptions of payout, tax rates, and investment returns are all off, either slightly or very much, the one factor you left out was INFLATION.
After 20 years of QE-ad-nauseum every installment will be worth increasingly less.
Your later dollars will be debased into OBLIVION!
So, all things considered, and unless one is an incompetent idiot, the lump sum is the most sensible choice.
Lump sum. If we won big I wouldn't be worried about blowing it all; we'd initially splurge a little initially (some nice vacations, maybe a pied-a-terre somewhere), and work with the best advisors possible to form a family foundation. I'd hire people to help with the administrative work (got to leave some time to enjoy the luxury of being able to do more travel!), but essentially giving out money to causes and needs we feel important would be our work for the rest of our lives.
does noone but myself ask... if i recieve payments (interest on the winnings), and after the payments run out... WHO GETS THE money thats STILl in the bank??? the lottery is such a scam, for people who dont even play it either.... if you dont understand money, you should be allowed to use it....
does noone but myself ask... if i recieve payments (interest on the winnings), and after the payments run out... WHO GETS THE money thats STILl in the bank??? the lottery is such a scam, for people who dont even play it either.... if you dont understand money, you should be allowed to use it....
I don't understand what you are asking.
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Based on the questionable accounting skills demonstrated here, best advice is summarized by 
-- if you took the lump sum and put it in your mattress it'd still be more money than you'd ever make (and likely spend) in a lifetime -- so it doesn't MATTER what you do with it or how you receive it -- as long as you don't BLOW IT -- and start living like Donald Trump, 
