Originally posted by: scruffypup
Originally posted by: zerocool84
Originally posted by: chuckywang
Originally posted by: Marlin1975
Originally posted by: Eli
Originally posted by: zerocool84
Originally posted by: silverpig
Originally posted by: halik
That's what happens when you give idiots money. They should just make a rule that if you can't pass a basic personal finance test, you have to take the payment plan.
If someone gave me $16M net of tax, I don't think I'd have to work for the rest of my life.
Shit I'm up 23% '08 and ~16% YTD with just contrarian equity plays... MVE optimized portfolio with some ~25% actively managed allocation (5% by meself) should yield good 10% annually... I'd be set for life.
A lot of people do take the payment plan, then sell it to a company for a lump sum payment.
It'd be better to take a lump sum cus you can either invest it or just put it in many different high yield savings than just get the payments and not getting any interest on any of it.
It'd be interesting to do the math. Taking the lump sum really cuts into your winnings.
With a 16mil jackpot, you would get a 5.5mil lump sum after taxes. Or you could take ~$367,000 a year for 30 years, which is over 11 million.
5million at 5% over 30years is over 21million.
Always better to take the lump sum unless you really can;t trust yourself and even then you can sell the annuity.
Do you have a surefire way to make 5% annually?
Well add some investments and you can make which would be more than 5% long term. I would take the lump and invest most of it in low risk stuff and that should set someone for the rest of their lives. Buy a house, money there. Buy some land and build apartments/condos, money there. There are so many ways to make $$$ it's crazy then to just let it sit somewhere and not make anything off of it.
Lump sum is NOT always better,...
First of all you need to consider you won't always get a set percentage annually,... whether it is stocks, bonds, real estate, what ever, there is no guarantee,... you might be too conservative to make up the difference, since the second is invested by the Lottery in an annuity with guaranteed rates of interest to guarantee the payments,... you would have to beat that rate of return and have low enough risk to make it almost a guarantee,... which generally at best makes this about the same as the annual payments in the long run
Second,... if you take the annual payments,.. you still have a lot each year you can invest and that is not being taken into account either, you might be more aggressive with extra money to invest this way since you have a guaranteed 30 years of payments
Third,... it all depends on what types of investments each year for both methods,... and tax rates each year which can change a lot over 30 years,.... what types of return you are paid on the investments,... dividends and interest are taxed higher (tend to be lower risk) than long term capital gains for instance (tend to be higher risk), there could be ways to keep taxes minimal with the lump sum and pay less taxes in the long run,.. but again,... at what tradeoff to guaranteed payments, and possibly less money overall in long run,...
Lump sum generally involves more risk to get the same in the long run, which means you could end up with much less, but possibly much more,....
30 years of a guaranteed amount (which you can invest a lot each year and have that grow just like lump sum) is very attractive to many,... especially those older with less chance of getting back into workplace if a quick and sudden loss of wealth requires one to do so with the lump sum option!!!
Edit: you also assumed in your calculation that you didn't spend any of the 5 million earning 5% over 30 years,... take into consideration a reasonable amount for living and taxes each year, invest the extra on each side and then you will see the numbers are much much closer,... however there is still more variables like I alluded to above,... yearly returns and tax rates aren't going to hold steady,... say if you put it all in stocks and had a 10% loss of the 5 million the first year,... then averaged 5% after that,... and do the same with the annuity payments,...etc, etc, etc