Random Thoughts

[edindetroit]

.

Investment saviness aside, post receipt, you'll bring home way more over time versus taking the lump.

Not according to the professor I had for a finance class.

[Topweasel]

There are several issues with taking the over time issue. The two biggest being inflation and the other being dollar value. In theory over time you would make more but would the 30million you got in year 20 really be worth as much as the 10 million you would have gotten in its place year 1.

Another is just life in general. I for one don't want to live another 20 years. Lots of people don't have a choice in the matter. You already had one huge break winning the lottery why take a chance on another that you would see the entire payout.

Sent from my Nexus 6 using Tapatalk

[Panoptes]

Not according to the professor I had for a finance class.

One of mine used the lottery annuity as a training tool as well.

I think in this case, tvm is greater than time taking a toll on my brain. ;)

(Edit) No, i remembered correctly. That is why I prefaced my original statement with, "investment saviness aside":

Lottery Annuity vs. Lump Sum
by Herb Kirchhoff, Demand Media

If you are one of the fortunate few who win a lottery jackpot, one of the first choices you must make is whether to take your winnings in a single lump sum or spread them out in annual payments over a span of 25 to 30 years. It may look like an easy decision, but there are a number of factors to consider in choosing one option over the other.

Less Money
If you choose the lump sum rather than the extended payout, you will get much less money than the advertised jackpot value. If you choose the extended payout, the state takes the present cash value of the jackpot and buys an annuity or bonds that will generate interest to fund the future payments. If you choose the lump sum, you will generally get slightly more than half of the advertised jackpot value. For example, if you won a $12 million jackpot in the multistate Mega Millions lottery game, you could take $461,538 a year for 26 years and get the entire $12 million, or accept a lump sum of $7,042,000, equal to 58 percent of $12 million.

Investment Savvy
State lottery agencies say the lump-sum option is fair because you can get the advertised jackpot value if you wisely invest your proceeds. However, the state lottery can invest the entire present cash value of the jackpot while you will only be able to invest the after-tax amount. Therefore, to match the state lottery's payment installments, you would have to earn a significantly higher investment return on your lump sum than the state would need to get.

Tax Effects
If you take your winnings in a lump sum, you will owe income taxes on the entire amount in the year paid. That financial windfall probably will push you into an upper tax bracket. Spreading out the payments over a couple of decades means you will owe taxes only on the amount paid to you each year. This may result in more after-tax dollars than if you take the lump sum.

Money Management
Your money-management skills will affect your decision. Lottery literature is full of stories about winners who ran through their jackpot money in a few years and ended up worse off than before they won. By taking the extended payouts, your mistakes generally are confined to the current year. The annual installments let you learn from your mistakes and do better with next year's payment. If you squander the lump sum, you don't get a second chance to manage it better.

Considerations
Your decision may depend on your age. If you are young, you may want the extended payouts as a financial base for a business or lifestyle. If you are older, you may prefer to get it all now and be free of money worries for your remaining years. The state lotteries guarantee that if a winner who has chosen the extended payout dies, his heirs will get all of the remaining installments.

[edindetroit]

The state lotteries guarantee that if a winner who has chosen the extended payout dies, his heirs will get all of the remaining installments.

I didn't know that, I thought it stopped at death.

[Topweasel]

I knew money goes to heirs when you die. But its not the same as enjoying the money yourself. It's nice knowing your family is set for the next 15 years if you dies 5 in no matter what their spending habits are. But that's not the same as enjoying the money yourself. 10 million in the hand is better than 25 in the hand 20 years from now, specially if you die 5 years in.

[CGVT]

That is so much money that I take the lump sum and never look back.

[Topweasel]

Same.

[froot loops]

I had a friend win the Lotto in Canada two years ago. Apparently you don't pay taxes up there. I think he won 7 million.

[LionsFanInJapan]

You don't have to pay taxes on it in Japan either, but I'm sure the U.S. government would tax me if I won it. ;)

Not to mention, the jackpots don't roll over like in the states. It's a flat $7 million or $10 million I think.

[Marko69]

Rowing boat down at Hawes Brae Harbour in Queenferry. Load all hand and power tools onto boat. Row out to under the Rail Bridge. Dump previously mentioned tools overboard. Row back to shore. Drive back to house. Sit on fat arse drinking and eating and contemplating what to do for several days.

Then probably piss off to Punta Secca in Sicily for a few months and drink and eat some more.

[LionsFanInJapan]

Sounds like a good weekend.

[Marko69]

Excellent new avatar there, LFIJ........, make them wear the gear young! That's the stuff.

Caption for that photo:

Tyler, mean & moody at school talking to pals:
"Yeah I know the Lions have won fk all. What's your point, mofo?"

[Trickalicious]

Tyler, aka "Ginseng T" come out with his album already?

"Lions lid on sideways, Lions eyes on the highway, I75 rollin' since last Friday.
Lef' da' D fo' Miami. Martha rollin', Cladwell trollin', got nuthin' on me.
Hard like San Quentin, K-Moto representin'....kickin' it smoove like Ginseng T"

[Malto Marko]

Why is the media reporting the North American International Auto Show is under way when the only ones allowed in are media and privileged guests?

Oh wait.......the real reason it exists which is to allow the minions to preview their wares do not count......

[Marko69]

Tyler, aka "Ginseng T" come out with his album already?

"Lions lid on sideways, Lions eyes on the highway, I75 rollin' since last Friday.
Lef' da' D fo' Miami. Martha rollin', Cladwell trollin', got nuthin' on me.
Hard like San Quentin, K-Moto representin'....kickin' it smoove like Ginseng T"

superb.

Sung this about 4 times with different tunes. Love that "K-Moto representin' "