If you win the lottery...

[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.

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

 

[lchyi]

I would buy the position of Anandtech Moderator.

 

[anxi80]

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.

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

that $10 million is mine!! but dont worry Duroc, if i win, ill pay for the chrome job, k?

 

[jonmullen]

Originally posted by: dnetmhz

Originally posted by: conjur
Lump sum

 

[DrPizza]

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.

 

[Chaotic42]

Lump sum.

First purchase: Dodge viper

Second purchase: House in Slidell, LA

 

[dartworth]

I took the lump sum when I won with a scatch off last week.

w00t..$2

 

[prvteye2003]

Originally posted by: Storm
Who wouldn't want to take a lump sum? Someone who can't control themselves when spending money?

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

 

[Yax]

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.

 

[royaldank]

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.

 

[AlmostFunny]

Originally posted by: conjur
Lump sum

 

[shopbruin]

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?

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.

 

[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.

 

[Kenny]

Lump sum and play with some mutual funds, maybe start a small business.

 

[DT4K]

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?

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

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.

 

[m2kewl]

Originally posted by: conjur
Lump sum

 

[hdeck]

Originally posted by: conjur
Lump sum

 

[Feldenak]

Originally posted by: conjur
Lump sum

 

[ElFenix]

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?

i think the PDV is similar, right. with the lump you could put it all in index funds and have a much higher pdv.

 

[Anubis]

lump sum -> off shore bank -> live off intrest -> do absoutly nothing and love it

 

[GoingUp]

Originally posted by: conjur
Lump sum

 

[her209]

Two chicks at the same time.

 

[cliftonite]

Originally posted by: her209
Two chicks at the same time.

Beat me to it :| I would take the lump sum

 

[petery83]

lump sum

 

[EvilYoda]

Originally posted by: cliftonite

Originally posted by: her209
Two chicks at the same time.

Beat me to it :| I would take the lump sum

and it took you guys like 60 responses to say it!? I'm so disappointed.

<---Lump sum.