You Won the Lotto! Now what…

June 7, 2006 at 1:42 pm 4 comments

It's Just Money wrote a very good entry comparing taking cash value or annual payment if one shall win the lotto.

It makes more sense to take the cash value so those money can generate even more money. However, if I win the lotto (assuming my financial and personal situation is about the same), I would take the annual payment.

I have no problem with handling such amount of money. However, when it comes down to what I want in life, annual payments make more sense (for NOW). With annual payment, I would have the freedom to choose how I spend my time (work, travel, bumming around…) for at least the next 20 years. I been taught well in term of living within my mean, so if I save and set money aside for retirement and investment, I can manage to have that financial freedom for the rest of my life.

However, if my situation change (most likely), I'd take the lump sum. For example, say if my parents' livelihood is depending entirely on me or if I have kids, then I would take the lump sum so if anything shall happen to me, their lifestyle won't change overnight.

What would you do if you win the lotto? 


Entry filed under: Financial Goals, Personal Investing.

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4 Comments Add your own

  • 1. Jeremy  |  June 7, 2006 at 4:31 pm

    Step 1) Hire a good Accountant. I’m going to need one, and I can sure as hell afford one now.

    Step 2) Sit with accountant and figure out which option will have me on a sailboat in the Carribean with the least amount of worries.

    Probably take the lump sum. Although one of the comments on the blog you linked did bring up the non-trivial tax issue. Which is why step 1 is hiring an accountant.


  • 2. Danny  |  June 8, 2006 at 10:22 am

    err… accountant isn’t the best for 2… they are called “financial advisors”… accountant mostly just do your taxes -_-‘

    i’ll take it lump sum and invest it in something else *shrugs*

  • 3. Nate  |  June 11, 2006 at 9:21 am

    Let me just say a “+” and a “-” of choosing an annuity:

    “-” If you choose an annuity, the choice is irrevocable. Let’s say after you start receiving annual payments, you decide to take the remainder in cash. The only way to do this is buy selling the annuity to a 3rd party such as a financial institution. Of course, they will charge you a fee to do this.

    “+” Usually the annuity payments are smaller at the beginning and grow larger with each payment. Some may not look at this as a plus. However the type of people who would want an annuity are those are looking for a consistent income stream. The lotto annuity accomplishes this by taking in to consideration by making cost of living adjustments into the payments.

    Of course another “-” is that you do not get to choose the length of the annuity.

    I would choose the lump-sum simply because I want to be in control of the $.

  • 4. marcus tylerl  |  April 22, 2008 at 8:57 am

    it all depends on the winning amount. lets’ say 5 million lotto win i would take the lump sum and invest. hopefully i find a good financial team to help my money grow. however, if it’s 50 plus million I would take the annuity. an annual check of 1.5 million, and it’s progressive, for thirty years is more than enough to enjoy life with family and friends. let the lotto commission manage my checks annually for the duration. i don’t have to worry about whether my financial team is honest or not. some lotto winners invested badly by their financial team and lost it all within five years. i can’t go wrong with annuities. If I or should I hire a team with my first check and investments go wrong, i still have 29 more years left.


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