22 May Powerball
Every so often when the Powerball jackpot gets up into the hundreds of millions of dollars, we can’t help but buy into that tangible electricity of hope buzzing around the country. “It could be me!” we all think as we walk around town with that (hopefully!) lucky $1.00 ticket in our pocket. Just in case you should ever find yourself in the extremely unique, extremely rare, extremely lucky position of actually winning the Powerball Lottery jackpot, there are a few things you should know:
Go for the lump sum. When you have the golden ticket, they are going to want to know if you would like your winnings in one lump sum or in payments over the next 20+ years. Generally pay-outs are higher when the interest rates are lower. Since currently we are experiencing all time low interest rates, this would definitely be the time for a big lump sum! This kind of windfall will most likely bump you up a few tax brackets for the rest of your life, so a lump sum is also in your best interest for tax purposes that will likely go up in the near future.
I’m a millionaire. Now what? You are handed a small check with a big number on it, but what do you do now? You could take it to your local bank and deposit it into your checking account but the FDIC will only insure a tiny percentage of your new wealth. Instead, take it to the U.S. Treasury as it is considered one of the safest investments available. This is a secure way to deposit your money in a protected structure without any limits on what is insured while you decide on a long term strategy to manage your assets.
Breaking “the curse.” It is a common tale perpetuated in the media today that lottery winners become so burdened by their newly found wealth that they squander the money and lose valued relationships with loved ones. With 3 lottery winners as clients I can whole-heartedly assure you, they are nothing but happy and grateful! Perhaps they were happy and grateful people before winning the jackpot, but certainly with the right system in place (financially, personally & emotionally) after such a life-changing event, you too can stay exactly who you are now. You might quit your job today or keep on doing what you love, the fact is, it isn’t the curse of the lottery that breaks people, it’s usually our own limitations. Now with the day-to-day money troubles out of the way, the door is wide open for a whole lot of good to come from your abundance.
Hire someone impartial. This is crucial with lottery winners. While you may trust your Great Uncle Joe for basic tax preparation, it is usually best to find a qualified financial advisor that you do not have any personal ties to. Of course, if you do have someone close to you that is truly an expert in the area, you may reconsider, but for the average person coming into a large sum of money, impartiality is key. They should treat you like all their other clients with suitable, customized investments tailored to your situation, both long and short term plans, and have the credentials in the industry that enable them to manage your funds responsibly. All too often winnings are mismanaged by people wanting to “keep it in the family.” To avoid this altogether, hire a financial professional you trust to watch your money full-time and keep the dividends in the family instead.