Q&A Friday #87: If You Won The Lotto…

04 Apr, 2008 by John Hawkins

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Question: “If you won the Powerball:© lottery (currently $57 million) would you take the lump sum payout (appr. $19 million after taxes) or the 30 year annuity (appr. 1 million per year after taxes)?

How do you suppose you would spend your winnings? Be as specific as you like.” — Good_Ol_Boy

Answer: I don’t play the lottery because it’s basically just throwing money away, but if I was given a ticket and I won, I’d take the immediate lump sum.

I’d drop a few hundred thousand dollars on a nicer house in the area I live in currently, I’d get an apartment in D.C. (I’d like to spend a few days a month up there if I could afford it), a new car (nothing too flashy, maybe $35k or so) — I’d give $1.9 million to charity, $500k away to friends and family, I’d set aside a few hundred thousand for ready cash and expenses (furnishing the house, for example), and then I’d invest the rest (which would probably amount to 15 million or so).

As you can see, I would have more money to spend right off the bat by taking the lump sum payout, but long term, I would also probably be able to earn enough investing to make up for the smaller payment in the beginning.