Lottery Winner Investment Advice
The first piece of lottery winner investment advice I typically provide is whether to take the lump-sum payout or the annual annuity. This decision ranks as the most important choice you can make after you win a large lottery because it will have long-lasting implications. Although there is one way to make this decision very easily, if you wait too long you will be forced to take the annual annuity. I’ve worked with some lottery winners who didn’t even realize they had won until the decision to take the lump-sum payout had expired and they were required to take the annuity.
Did you know that the Powerball lottery rules state that you have 180 days from the drawing to claim the prize, but if you want the lump sum payout, you only have 60 days from the drawing to claim your prize?
If after discussing this with your financial, tax, and legal team you determine that an annuity makes the most sense, this means that with a Powerball lottery win you will receive 30 equal payments over 29 years. I’ve had some clients ask me if they still needed investment advice since they weren’t getting a lump sum amount but getting an annuity stream. The answer is that it depends on the size of the annuity payments. For example, in the $590 million Powerball lottery win in 2013, the 30 annuity payments turned out to be $19,683,000 per year! So unless you have a plan to spend nearly $20 million per year, the best piece of lottery winner investment advice is that you need an investment strategy.
The bottom line is that regardless of whether you take the lump-sum amount or the annuity, you want your lottery win to have a long-lasting and positive effect on your life. The solution is to develop an investment approach that both protects your assets and ensures that they will grow over time and that they will continue to meet your needs and the needs of your family.
If you or someone you know has won the lottery, contact us to see how we can help your particular situation. We will call you back today.