Guy making $7.25 an hour wins 258M Jackpot

[Cats Cats Cats]

http://news.yahoo.com/s/ap/20100423/ap_on_re_us/us_powerball_winner_missouri


How long do you think before this guy is broke?

[nathanm]

How long do you think before this guy is broke?

Depends on whether he takes the cash or the annuity.

IMO, one should always take the annuity, but most especially on larger jackpots. I think just about anybody would be fine living on 12 million a year for the next 20 years.

[custosnox]

Three kids with two mothers?  Makes me wonder how much will be going to child support.  But he lacks sophistication so it might take him a bit to get used to spending money, and that is a lot.  He apparantly is going to talk to people that "know more about money" then he does, so maybe he will get good advise and follow it.

[custosnox]

Depends on whether he takes the cash or the annuity.

IMO, one should always take the annuity, but most especially on larger jackpots. I think just about anybody would be fine living on 12 million a year for the next 20 years.

The problem with that, from my understanding, is that it would not transfer if something happened to you, so if you took the annuity and walked out and got hit by a bus, then that first payment is all that would go to your next of kin.  However, I personally would want the cash because I have big ideas that would not be able to be accomplished with just 12 mil a year.  I might go broke trying to make a bigger fortune, but I would have fun along the way lol

[TURobY]

Three kids with two mothers?  Makes me wonder how much will be going to child support.  But he lacks sophistication so it might take him a bit to get used to spending money, and that is a lot.  He apparantly is going to talk to people that "know more about money" then he does, so maybe he will get good advise and follow it.

So what, my cousin's husband claims to "know more about money". I'm pretty sure that I would avoid money advice from him; thus I am a bit skeptical unless it is a reputable CPA or financial planner.

[Breadburner]

Depends on whether he takes the cash or the annuity.

IMO, one should always take the annuity, but most especially on larger jackpots. I think just about anybody would be fine living on 12 million a year for the next 20 years.

Wrong again....Lump sum is the only way to go......

[custosnox]

So what, my cousin's husband claims to "know more about money". I'm pretty sure that I would avoid money advice from him; thus I am a bit skeptical unless it is a reputable CPA or financial planner.

hense why I said maybe lol Someone could just tell him he should up and move to the hills, beverly that is.

[nathanm]

He apparantly is going to talk to people that "know more about money" then he does, so maybe he will get good advise and follow it.

Either that or he'll go talk to a stock broker who will ensure he loses it all inside of ten years.

Hmm, if the annuity isn't inheritable, that would change my view.

Thing is, if you have big plans, the annuity provides a guaranteed income stream, so big plans can be accomplished with a little help from a bank loan if you really need a bunch of money up front. You can get a lot done with 12 million a year, anyway. One year of that would have been more than enough to get my FTTP business off the ground. I figured I needed about 4 million to build enough of a network to make it profitable enough to continue to expand. Never did find the 4 million, though.  

Breadburner, lump sum is pointless unless you're interested in having the entire sum exposed to trading losses, which I am not. If you have a lot of time to spend on it and are a reasonable intelligent person, you probably have pretty decent chances of earning a better return through investing, but most people don't see those kinds of returns. I saw what happened to my 401(k) in 2007 and 2008, thanks. I had about 30% in treasuries, which of course didn't lose any value, but the rest lost enough to halve the value of the entire account.

It would be nice if you'd explain your reasoning instead of just saying "wrong again."

Edited to add: And running the numbers through an NPV calculator, you're better off taking the annuity if you're bearish on returns. If you think you will earn more than 3.5% for the life of the annuity, you're better off taking the lump sum. I have little confidence in that at the moment. If you'd asked me 10 years ago, I would have taken the lump sum.

[fotd]

Life is short....take the lump sum....then start acting like a celebrity.

[custosnox]

Either that or he'll go talk to a stock broker who will ensure he loses it all inside of ten years.

Hmm, if the annuity isn't inheritable, that would change my view.

Thing is, if you have big plans, the annuity provides a guaranteed income stream, so big plans can be accomplished with a little help from a bank loan if you really need a bunch of money up front. You can get a lot done with 12 million a year, anyway. One year of that would have been more than enough to get my FTTP business off the ground. I figured I needed about 4 million to build enough of a network to make it profitable enough to continue to expand. Never did find the 4 million, though. 

Breadburner, lump sum is pointless unless you're interested in having the entire sum exposed to trading losses, which I am not. If you have a lot of time to spend on it and are a reasonable intelligent person, you probably have pretty decent chances of earning a better return through investing, but most people don't see those kinds of returns. I saw what happened to my 401(k) in 2007 and 2008, thanks. I had about 30% in treasuries, which of course didn't lose any value, but the rest lost enough to halve the value of the entire account.

It would be nice if you'd explain your reasoning instead of just saying "wrong again."

Edited to add: And running the numbers through an NPV calculator, you're better off taking the annuity if you're bearish on returns. If you think you will earn more than 3.5% for the life of the annuity, you're better off taking the lump sum. I have little confidence in that at the moment. If you'd asked me 10 years ago, I would have taken the lump sum.

Well, when I say big plans, let's just say I would have close to a 1/4 of it reinvested within five years, and at least 1/10 blown on stuff that I would want to just blow it on (I really like exotic cars lol).  I have thought about it on the occasion that I buy a ticket and figure I could account for these idea's and still make sure I put back enough to fall back on if everything blew up in my face so that I could live comfortably  in a savings account or some other low risk situation.  Since I don't know about investments as far as high yield accounts, stocks and so forth I would most likely educate myself more on these and seek the advice of someone who I can trust that would know more to help me set up something.  It's always good to have a backup plan.

However, someone like this guy has a pretty low level of sophistication and has a good chance of living very nicely off of the annuity while placing at large percentage in low and high yield accounts, as long as he doesn't let someone sucker him out of it.  You know what they say about a fool and his money.

[RecycleMichael]

I think cash option after taxes in Missouri works out to about $86 million. The winner is 29 years old.

My advice to him is to put it all in a tax-free bond and get 6% and pay the gubmint back 2% for a after tax income of 4%. This investment would pay interest of $9,500 a day.

Have that money put into a bank account for personal shopping. Take out $1 million each year for Christmas and buy something big.

You would never have less than $30 million in the bank until the day you died.

[Cats Cats Cats]

Depends on whether he takes the cash or the annuity.

IMO, one should always take the annuity, but most especially on larger jackpots. I think just about anybody would be fine living on 12 million a year for the next 20 years.

Then you sell the annuity for 150 million! 

[Conan71]

Ponder and I were talking about this last night- if you won, you'd be best to establish a trust so that you didn't have to reveal your identity.  That's what the Powerball winner in Broken Arrow did.

Lump sum is the only way to fly on it.  I do agree, this guy has the makings of a five year millionaire, just like others before him.

[custosnox]

Ponder and I were talking about this last night- if you won, you'd be best to establish a trust so that you didn't have to reveal your identity.  That's what the Powerball winner in Broken Arrow did.

Lump sum is the only way to fly on it.  I do agree, this guy has the makings of a five year millionaire, just like others before him.

I'm too lazy to set up a trust to do so, and too impatient.  I would be at the Lottery commision the day after the drawing, waiting on the front step with the ticket when they opened the door.  But then, if I did set up a trust it wouldn't matter because it would be kind of hard not to notice me going from dead broke to living in a big house with nice cars over night and making a lot of local investments.  I would just learn to smile at people asking for money and politely close the door in their face, especially if they are related to me.

[Conan71]

I'm too lazy to set up a trust to do so, and too impatient.  I would be at the Lottery commision the day after the drawing, waiting on the front step with the ticket when they opened the door.  But then, if I did set up a trust it wouldn't matter because it would be kind of hard not to notice me going from dead broke to living in a big house with nice cars over night and making a lot of local investments.  I would just learn to smile at people asking for money and politely close the door in their face, especially if they are related to me.

Many five year millionaires before you have said that.