The jackpot in the multi-state Mega Millions lottery is about $206 million, so I just bought a ticket. I always like to be prepared, but I’m not sure how to manage the huge windfall I am expecting to claim on Monday.
Lets say that I elect to take my prize as a lump sum rather than an annuity, and that after taxes it boils down to a check for $40 million. It can’t be a good idea to deposit it all in my checking account, since the FDIC only insures deposits up to $10,000. Should I spread it around in things like CDs and bonds? Should I turn it over to a financial advisor?
I expect that the publicity around my win will cause me to be deluged with offers from all sorts of money managers, not to mention scam artists, hucksters, and long-lost cousins. That’s why I’m asking for guidance in advance. What does one do with such a large amount of money to keep it safe, and hopefully make it grow?
Before you tell anyone you’ve got the winning ticket, contact a large, well-established financial advice firm. Let them guide you through the process. Diversification is probably what they will recommend, depending on your age, family status, and just what you want out of life.
The lump-sum payout is about 50% and taxes will eat around 35% of that, so you should wind up with something more like $65-70 million, not $40 million. FDIC insures deposits to $100k, not $10k.
I would find a really good attorney and talk to a large, well-established financial firm (“Hi, I’d like to speak to Charles Schwab in person please, I have $70M to invest”) about money managers. There are people who specialize in helping handle windfall profits.
My personal perspective - I have an old family friend who was a tax attorney for years and is now does investment work for a living, I’d start by talking to her for recommendations. I’d also give my mutual fund firm (Vanguard) a call.
I suggest you conact your Insurance agent and buy a large annuity, say $10Mil. They are hard to cash out so even if you blow everything you will have an income of $50K a month for life.
If you go through Consumers Reports or a similar non-profit org you can get an annuity with a slightly smaller pay-out but a portion of what you give them will be tax deductable and damn will you need tax deductions.
In any case you are insured up to $100,000 not $10,000 and it is quite safe to leave more than that in your account for a short time, while you are arranging things and disbursing it out. Of course you will choose an interest bearing account, like a NOW account.
Then buy a house, paid in full. Now you have two solid investments.
You’ll only get half the amount you think, because the other half will be split with my winning numbers.
Seriously – check my out in the SDMB search. I don’t buy lottery tickets. Except today – not less than an hour ago I bought the first lottery tickets in my life.
I went to Milwaukee, WI (Powerball state) for work on Thursday and, being here in Megamillionville, Illinois, I’m expecting a combined $500,000,000 weekend.
Treasury bills are about the safest bet you can make if you want to park your cash for the short term (1 year) while you figure out what to do with the windfall. It’s all guaranteed by the U.S government, which in over 200 years has never defaulted on its debt.
Sorry to burst all of your bubbles, but I didn’t buy a ticket. Thus, there will be a rollover and I will win a truly abscene amount of money next week.
FWIW, it turns out I didn’t even win so much as to break even on my sure-thing investment. What’s wrong with the strategy that I pursued? What need I do differently?
