Posted on 01/12/2016 7:25:22 AM PST by Rockitz
One of his points was omitted from the post:
“You don’t become a smart investor when you win the lottery. Don’t make investments. You can put it in the bank and live comfortably. Forever. You will sleep a lot better knowing you won’t lose money.”
Someone mentioned the other day that it could very likely be an illegal.
People can also sell the rights to payments which is quite a popular business for people who have gotten large court settlements, etc.
Continuing...
/ 4. You will be encouraged to hire an investment manager. Considerable pressure will be applied. Don’t.
Investment managers charge fees, usually a percentage of assets. Consider this: If they charge 1% (which is low, I doubt you could find this deal, actually) they have to beat the market by 1% every year just to break even with a general market index fund. It is not worth it, and you don’t need the extra return or the extra risk. Go for the index fund instead if you must invest in stocks. This is a hard rule to follow. They will come recommended by friends. They will come recommended by family. They will be your second cousin on your mother’s side. Investment managers will sound smart. They will have lots of cool acronyms. They will have nice PowerPoint presentations. They might (MIGHT) pay for your shrimp cocktail lunch at TGI Friday’s while reminding you how poor their side of the family is. They live for this stuff.
You should smile, thank them for their time, and then tell them you will get back to them next week. Don’t sign ANYTHING. Don’t write it on a cocktail napkin (lottery lawsuit cases have been won and lost over drunkenly scrawled cocktail napkin addition and subtraction figures with lots of zeros on them). Never call them back. Trust me. You will thank me later. This tactic, smiling, thanking people for their time, and promising to get back to people, is going to have to become familiar. You will have to learn to say no gently, without saying the word “no.” It sounds underhanded. Sneaky. It is. And its part of your new survival strategy. I mean the word “survival” quite literally.
Get all this figured out BEFORE you claim your winnings. They aren’t going anywhere. Just relax.
/ 5. If you elect to be more global about your paranoia, use between 20.00% and 33.00% of what you have not decided to commit to a family fund IMMEDIATELY to purchase a combination of longer term U.S. treasuries (5 or 10 year are a good idea) and perhaps even another G7 treasury instrument. This is your safety net. You will be protected... from yourself.
You are going to be really tempted to starting being a big investor. You are going to be convinced that you can double your money in Vegas with your awesome Roulette system/by funding your friend’s amazing idea to sell Lemming dung/buying land for oil drilling/by shorting the North Pole Ice market (global warming, you know). This all sounds tempting because “Even if I lose it all I still have $XX million left! Anyone could live on that comfortably for the rest of their life.” Yeah, except for 33% of everyone who won the lottery.
You’re not going to double your money, so cool it. Let me say that again. You’re not going to double your money, so cool it. Right now, you’ll get around 3.5% on the 10 year U.S. treasury. With $18.2 million (20% of $91.2 mil after your absurdly generous family gift) invested in those you will pull down $638,400 per year. If everything else blows up, you still have that, and you will be in the top 1% of income in the United States. So how about you not [mess] with it. Eh? And that’s income that is [very] safe. If we get to the point where the United States defaults on those instruments, we are in far worse shape than worrying about money.
If you are really paranoid, you might consider picking another G7 or otherwise mainstream country other than the U.S. according to where you want to live if the United States dissolves into anarchy or Britney Spears is elected to the United States Senate. Put some fraction in something like Swiss Government Bonds at 3%. If the Swiss stop paying on their government debt, well, then you know money really means nothing anywhere on the globe anymore. I’d study small field sustainable agriculture if you think this is a possibility. You might have to start feeding yourself.
/ 6. That leaves, say, 80% of $91.2 million or $72.9 million.
Here is where things start to get less clear. Personally, I think you should dump half of this, or $36.4 million, into a boring S&P 500 index fund. Find something with low fees. You are going to be constantly tempted to retain “sophisticated” advisers who charge “nominal fees.” Don’t. Period. Even if you lose every other dime, you have $638,400 per year you didn’t have before that will keep coming in until the United States falls into chaos. {Heck with] advisers and their fees. Instead, drop your $36.4 million in the market in a low fee vehicle. Unless we have an unprecedented downturn the likes of which the United States has never seen, should return around 7.00% or so over the next 10 years. You should expect to touch not even a dime of this money for 10 or 15 or even 20 years. In 20 years $36.4 million could easily become $115 million.
/ 7. So you have put a safety net in place.
You have provided for your family beyond your wildest dreams. And you still have $36.4 million in “cash.” You know you will be getting $638,400 per year unless the capital building is burning, you don’t ever need to give anyone you care about cash, since they are provided for generously and responsibly (and can’t blow it in Vegas) and you have a HUGE nest egg that is growing at market rates. (Given the recent dip, you’ll be buying in at great prices for the market). What now? Whatever you want. Go ahead and burn through $36.4 million in hookers and blow if you want. You’ve got more security than 99% of the country. A lot of it is in trusts so even if you are sued your family will live well, and progress across generations. If your lawyer is worth his salt (I bet he is) then you will be insulated from most lawsuits anyhow. Buy a nice house or two, make sure they aren’t stupid investments though. Go ahead and be an angel investor and fund some startups, but REFUSE to do it for anyone you know. (Friends and money, oil and water - Michael Corleone) Play. Have fun. You earned it by putting together the shoe sizes of your whole family on one ticket and winning the jackpot.
“You should be hiring more than just a tax attorney, you want a whole team to manage the finances (and likely as a trust)”
I guess then you have to figure out how to go about finding honest, professional members of that team. Obviously, you wouldn’t want to hire from the Yellow Pages.
It's a start.
And remember that a chain is only as strong as its' weakest link.
I predict no one reading this will win. For the most part when you buy a ticket you get to fantasize and that’s it. This article and all the good advice Freepers dispense is just another form of fantasizing. Guess what. All of us have won a huge lottery when we were born. Congratulations to all us big winners!
The lump sum is not for everyone. If you are elderly, it’s probably not for you. But if money burns a hole in your pocket, it is definitely for you.
It’s best to tell no-one that you are a winner. If that is not possible hire a good lawyer who specializes in lottery winnings. A tax lawyer isn’t enough. You need one who knows the tax implications of large sums obtained in a short period of time. It’s not hard to find a lawyer of this type. They’re frequently used by people who are selling their companies or getting a buy-out.
Then use your money to start a foundation. Tell anyone who comes to you for a handout that all the money is in the foundation and they need to write a proposal and submit it to the independent reviewers at the foundation.
Years ago, Ann Landers had some rich guy ask her what to do with these relatives looking for a loan.
I forgot her answer (probably wishy-washy). Another rich guy wrote in with his Solomon-like solution: He'd go to his bank and put up the requested amount as collateral for the loan. The borrower had to pay back the bank, not him, so he was spared the sometimes inevitable dunning.
He said that those who intended to pay him back were all for the solution, those who were deadbeats said "Forget it".
Today it's listed at 1.5 Billion. You've made 200 million dollars in two days! Don't let anyone tell you you're not a financial genius. You now have proof.
Take the Lump sum. Do you trust the government to be supplying you for 25 years? All they have to do is change the laws.
If you set up a trust and present the winning ticket with the trust listed as the recipient. The money will go to the trust and be dispersed per the trust regardless if you are dead. if you set it up as the only recipient of the trust just make sure you have a will or it will go to the trust until probate is resolved...
LOL. I shoulda see that coming!
I think whoever wrote that is good, indeed. Good advice. If everyone followed it, no one who go broke from winning the lottery.
While I admire Cuban, I think he is wrong about number 2 on his advice list.
Many of us who are playing the Lottery won’t live another 30 years to collect the money. I am one of those.
Many of us who are playing the Lottery do NOT believe that a state like California will be around for another 30 years in a financial position to pay us annual payments.
I would GLADLY take the lump sum & work with the money myself.
I totally agree with Cuban saying get ready to tell your relatives & friends NO.
The smartest person I ever heard of who won the Lottery in Pennsylvania did this:
He already was divorced from his wife. Don’t know about any alimony payments.
His kids were over the age of 21. No support payments needed there.
He owned his home.
He owned his business.
He ‘found a new property in the West’.
He opened a new bank account in that area.
He sold his business.
He sold his home.
He went to court & legally changed his name. He had no criminal record so that was perfectly legal.
He waited until the last week in 180 days to go collect his money———from the Lottery officials-—and asked that his identity not be revealed. He only gave them a bank account number.
I think he did take the payments, as he was in his mid-fifties.
THAT is the SMARTEST person I ever heard about who won the Lottery!!!! I intend to copy him!!! Except I will take the lump sum due to my age.
The earlier you buy the ticket, the more time you have to fantasize! For $3.00 it is better than three days at Disney World and you save #312.00. Look at the bright side, somebody will win, but any Lottery is simply a tax on people who don’t understand math or understand odds.
Have you paid your taxes yet?
I disagree with Cuban...Lump sum!! Yes, invest it, but very conservatively - NOT the bank savings account - you’re losing money. $100,000 out of 600 million really is nothing....I have 5 older brothers...We’re gonna all be set up. But I do realize the scammers and scum that will show up and that would be a huge negative.
.
With $500 million dollars, you could drop $5,000 each and every step for over 57 miles before running out of money. I don’t need that much money. Im gonna have fun giving it away.
Many states require that you not only show up but do some lottery promotional stuff.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.