Q&A Friday #87: If You Won The Lotto…

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).

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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.

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