# If you win the Powerball, where do you (temporarily) put the money? **URL:** \ **Category:** Factual Questions\ **Created:** [August 26, 2017, 5:53pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747 "2017-08-26T17:53:53Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [August 30, 2017, 10:01pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/121 "2017-08-30T22:01:11Z")
> [@Corry\_El](#): > > …the IRR, is 2.71%… That makes a bit more sense, thanks. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [August 30, 2017, 10:02pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/122 "2017-08-30T22:02:35Z")
> [@Loach](#): > > The question isn’t where to invest it. The question is where to hold the money temporarily until you figure out what to do with it. Putting it in a big bank like BoA is not zero risk but it’s pretty close when you are talking about a week or two at most. Sure anything can happen. We might all get wiped out by an asteroid in that time too. Treasuries are safer than banks. I’d park my money in Treasuries for even a few days or weeks. > [@DrDeth](#): > > You’re not “investing” you are parking for long enough for your advisors to figure out where to put in. You are investing because you are putting your money in an institution with the expectation of a return. Sure, it’s a very short term investment but it’s still an investment. > [@Mangosteen](#): > > The whole $300 million goes into my Vanguard Total Stock Fund. The annual 10 year average (2005 through 2015) is up 7.4%. > > This means I’d be making $21 million a year just having the money sit in the account. > > Or am I missing something here? How would you have felt in 2008 if your portfolio had gone from $300 million to $200 million? If you can honestly say that you could swing that without batting an eye, then this isn’t the worst plan. If you would sell near the low, you might want to consider diversifying and including short-term fixed-income investments to fund your anticipated spending for the next 3-5 years, plus additional fixed income investments just to reduce volatility. > [@Ornery\_Bob](#): > > First of all, there is no rush to cash in your ticket. You have 180 days (basically six months). I think this depends on the state. In some states you have a year I think. > [@Velocity](#): > > As much as it may be good advice to not turn in the winning ticket immediately, I could never have any peace of mind knowing that that ticket could be stolen, destroyed, lost, etc. as long as it is in my possession. Knowing me, I wouldn’t have a minute of peace in my head until I had \*officially \*been certified as the winner by lottery officials, etc. So I’d take it to them ASAP, probably the very following day… I totally get this fear. I’d keep copies of the ticket front and leave the original in a safe deposit box until I was ready to cash it in. > [@edwardcoast](#): > > There is no reason for the delay. You make a phone call to your accountant and attorney, and have them accompany you to claim the winnings. If you won $300M, if your regular accountant and attorney aren’t available on short-notice (very unlikely) then you can quickly find good ones that are or someone else from their firm. What good does it do you to bring them with you to cash in the ticket? Are they going to wear dark glasses and fend off the mobs at the lottery office like hired thugs? You need their services to plan. My goals in consulting with professionals would be: protecting my privacy, minimizing taxes, and planning my estate. I would have to take many important steps before I cashed in my ticket to achieve those goals. If I just bring my accountant and attorney to claim the prize, I’m too late to do many of the things I want to do. > [@SlackerInc](#): > > My wife and I buy a ticket every time it becomes a big thing in the news (so probably we’ve spent thirty bucks over the decade we’ve been together). This is how I play, but I’m probably up to a hundred or so dollars because my wife and I always buy three tickets. One for each of us and one for our dog. 🙂 I spend way more time talking about lotteries on this board than I do playing. > [@Dewey\_Finn](#): > > But if you could get about an investment return of about five or six percent, you’d still get that $17 million each year, without touching the principal amount. And the S&P 500 historically has returned about ten percent, so it seems doable. 5-6% is probably a pretty safe estimate for a diversified portfolio. My hunch is 10% is probably a little high given where the stock market is today. Then again, I’ve thought that for almost two years now. Don’t ask me for market timing advice. > [@Riemann](#): > > When comparing the annuity to the cash option, the pertinent question is, could you take the annuity and then sell the cash flows for more than $300MM in the open market? > > Is it a fixed 30 years, rather than lifetime? If so, I make the IRR 8.2% for cash $300 vs $753 spread evenly over 30 years. This is a good question but you miscalculated the IRR. I think you compared an after-tax number ($300 million) to a pre-tax number ($758 million grand prize). The real IRR is about 3.5% if you assume a 30-year payout of about $25.3 million per year versus a lump sum of $480 million before taxes. > [@SlackerInc](#): > > As others have noted, not necessarily. **Corry El’s** guesstimate was pretty accurate, according to [this calculator,](http://www.free-online-calculator-use.com/future-value-of-money-calculator.html) which finds $753M to be what $300M grows to in thirty years with just under 3.1% interest. And if we ever get 1970s style inflation again, the annuity will start looking like a real sucker move: in the last decade it could start looking like merely “well off money” rather than “FU money”. This is almost the right IRR but the reasoning is wrong. > [@Riemann](#): > > That’s not the correct way to value the annuity. The $753MM is not received _after_ 30 years, 1/30 of it is received _each year_ for 30 years. As I said above, if you value the cash flows ignoring taxes, the IRR is 8.2%. > > But, as we’ve noted, the tax situation is complex. This is the right reasoning, but comparing the wrong numbers (post-tax lump sum to pre-tax annuity). > [@LSLGuy](#): > > As you may have noticed, all the gains in the last 20 years have flowed to the 0.1%. IOW, those are the people who have the excess money to bid up the price of goods. > > If you have $10M to spend on a real estate investment you can either spend it buying 100 $100K houses appreciating at ~3% a year. Or you can buy one $10M palace appreciating at 10+% a year. > > Tough call. There is no reason to believe that real estate for the wealthy will appreciate at anything like that rate, nor any reason to believe that real estate for the poors will appreciate so much more slowly. High-end real estate also has enormous carrying costs in taxes and maintenance which would drag on your returns unless you rent the properties out. Ask Johnny Depp how wealthy he has become hoarding high-end properties. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [August 30, 2017, 10:11pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/123 "2017-08-30T22:11:48Z")
Too late for the edit window: Corry El has pointed out that the annuity stream isn’t equal as I assumed. I get an IRR of 2.71% when I start with a first year payment of $11.414 million, increasing 5% per year for 29 more years. The total payments come to a little over $758 million. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [August 30, 2017, 10:34pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/124 "2017-08-30T22:34:54Z")
> [@Tired\_and\_Cranky](#): > > 1. This is a good question but you miscalculated the IRR. I think you compared an after-tax number ($300 million) to a pre-tax number ($758 million grand prize). The real IRR is about 3.5% if you assume a 30-year payout of about $25.3 million per year versus a lump sum of $480 million before taxes. > 2. There is no reason to believe that real estate for the wealthy will appreciate at anything like that rate, nor any reason to believe that real estate for the poors will appreciate so much more slowly. High-end real estate also has enormous carrying costs in taxes and maintenance which would drag on your returns unless you rent the properties out. 1. [Sorry ninga’d by your reply]The IRR would be around 3.5% if the payments were level. Since they increase at 5% a year it comes out as 2.71% see above. That illustrates the difference from that little curve ball they add in of making it a schedule of increasing payments, lower IRR for the same non-discounted total. 2. I agree with this on both counts. And obviously if somebody bought 100’s/1,000’s of more modest properties with a huge sum they’d be renting them out, not living in all of them. Even hiring companies to manage everything about the rentals it’s hard to beat the return on rented out properties with properties you either live in or are empty when you don’t. Then also while shifts in the techno-socio-economic environment have obviously led to much faster appreciation of real estate in places with a lot of high end RE and rich people, it hasn’t always been limited to high end RE in those places. For example in NY high end Manhattan RE has done better than some more modest places in the city and metro area, but worse than others, particularly areas once viewed as undesirable. For the near/medium future I’d guess the trend toward ‘world city’ type real estate outpacing ‘heartland’ type places in the US would continue, but again in NY I’d like still marginal areas of Brooklyn more than super expensive places in Manhattan, just for appreciation potential. Anyway spreading a lot of $300mil around, with due consideration of carrying expenses, in a number of very nice places to live in various desirable parts of the world is a reasonable theory IMO of how to proceed to enjoy that kind of money. If you want to enjoy by purchasing things, rather than sit on it and enjoy its very existence, or enjoy giving it away. Compared to collecting things like cars, boats, planes, jewelry where getting appreciation at all might be more difficult (though also possible). But indeed you’d need to be wary of the significant net carrying cost relative to value of properties _where you aren’t collecting any rent_. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 31, 2017, 1:03am UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/125 "2017-08-31T01:03:18Z")
> **[A third of the most expensive apartments in New York are empty most of the time](https://www.businessinsider.com/expensive-new-york-apartments-empty-2016-1)** > > A jarring statistic from the US Census Bureau. > [@](#): > > “According to the Census Bureau, throughout a sweeping stretch of midtown-from Forty-ninth to Seventieth streets, between Fifth Avenue and Park-nearly one in three apartments is completely empty at least ten months a year,” Keefe writes. > > Here’s a look at the area Radden-Keefe is referring to. It covers some of the densest areas in east midtown and includes a few of the most expensive addresses in the city, including , 432 Park Avenue, The Plaza, and the soon-to-be-opened 520 Park Avenue. > > As Keefe explains, investment in Manhattan real estate is a lucrative and untraceable means of parking money. > > The apartments don’t just hold their value, but tend to rise in value - according to Trulia, the average sales price of an apartment in east midtown has tripled over the past 15 years. And even in an age of increased legal scrutiny of criminal exploitation of the financial system, it’s still possible to anonymously purchase and own property in the United States. ---
**Author:** ![aceplace57](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aceplace57/32/3500_2.png) [@aceplace57](https://boards.straightdope.com/u/aceplace57)\ **Post date:** [August 31, 2017, 2:23am UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/126 "2017-08-31T02:23:00Z")
This happened to Jed Clampett. Milburn Drysdale became his instant best friend. I’d have the money transferred into my Credit Union Account. It’s a big state wide bank. I’d probably be their biggest client until I got a brokerage account set up with Wells Fargo. That kind of money is almost unquantifiable. I’d have no idea how to invest it. My own needs would be satisfied with 10 million. That’s a drop in this big bucket of money. I’d probably pick a franchise and open some new locations. For example Jimmy John’s doesn’t have many locations in Arkansas. I know of several towns where locations could be successful. ---
**Author:** ![aceplace57](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aceplace57/32/3500_2.png) [@aceplace57](https://boards.straightdope.com/u/aceplace57)\ **Post date:** [August 31, 2017, 2:46am UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/127 "2017-08-31T02:46:44Z")
I would find it very satisfying to provide jobs to a community. I was curious. A Jimmy John’s startup is 500k. You could open ten and still not make a dent in $300 million. > **[Start a Jimmy John's Gourmet Sandwiches Franchise in 2023 - Entrepreneur](https://www.entrepreneur.com/franchises/directory/jimmy-johns-gourmet-sandwiches/282480)** > > A Jimmy John's Gourmet Sandwiches franchise can offer the chance to start your own business and be your own boss in the Food industry. Start your search for the perfect franchise today. That’s a hundred people that would have jobs if I won the lottery. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 31, 2017, 3:02am UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/128 "2017-08-31T03:02:25Z")
> [@aceplace57](#): > > I’d probably pick a franchise and open some new locations. For example Jimmy John’s doesn’t have many locations in Arkansas. I know of several towns where locations could be successful. That’s a good idea. Along those lines, here’s a freebie for anyone thinking of doing something similar. This summer my wife and I were driving around in Fargo-Moorhead and I was looking on my phone for a McDonald’s to pick up ice cream cones for the kids. There are two pretty obvious “dead spots” on the map ([see here](https://www.google.com/maps/search/mcdonalds/@46.8624206,-96.804499,12.43z)) where they really ought to have franchises. You should be able to spot them: northwest and southeast corners of the metro. I-29 should have one up at either the 12th or 19th Ave. exits; and I-94 needs one on the Minnesota side of the river: 8th St. or 34th St. Easy money, looks like to me. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [August 31, 2017, 5:52am UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/129 "2017-08-31T05:52:40Z")
> [@edwardcoast](#): > > You donate money to the charity now and let them manage how they invest the money. They have investing experts who did that for charities and other non-profits. No reason to take on a burden yourself that you aren’t up to handling unless you are already in the business. It is arrogant to assume you can do better than the experts that manage the funds for the charities. No it’s not. Who knows how a charity invests money or with whom. They might pay huge fees to an actively managed fund. Who knows? And additionally, you might change which charity you want to invest in for a variety of reasons. I’m not sure why so many are scared to put money into a Vanguard fund and let it grow for decades AND actually maintain control over that large amount of wealth. > **[Tiny US colleges' investments are outperforming Ivy Leagues with...](https://www.businessinsider.com/passive-investing-for-average-person-college-endowments-2017-2?r=nordic)** > > Harvard University lost 2.2% on endowment investments in 2016 while Houghton College gained 11.9%. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [August 31, 2017, 12:47pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/130 "2017-08-31T12:47:05Z")
> [@aceplace57](#): > > This happened to Jed Clampett. > > Milburn Drysdale became his instant best friend. > > I’d have the money transferred into my Credit Union Account. It’s a big state wide bank. > > I’d probably be their biggest client until I got a brokerage account set up with Wells Fargo. > > That kind of money is almost unquantifiable. > > I’d have no idea how to invest it. My own needs would be satisfied with 10 million. That’s a drop in this big bucket of money. > > I’d probably pick a franchise and open some new locations. For example Jimmy John’s doesn’t have many locations in Arkansas. I know of several towns where locations could be successful. Yeah, I figure Jed’s $65M (IIRC a number cited every so often in the show) would be equivalent to $650M today. More than enough to buy a nice $35M mansion and keep Jethro in toys and repairs to toys. I read an article a while ago where they talked to assorted lottery winners - just the people who won $1M and around that range. A million sounds like a lot, but not really if it has to last you the rest of your life. (In fact, heard recently some DJ on the radio mentioning that he and his girlfriend had won $1M in the lotto - he was still working) These people said that you would not believe the nuts that come out of the woodwork. Not just relatives, or distant acquaintances asking for something - but total strangers knocking on the door, letters from people describing their hard luck, etc. I imagine professional charities would be glad to get your number too. One fellow won almost a million dollars. He tried to keep working, but the guy at the next desk just would not shut up about how he had plenty of money now, he should help him pay off his mortgage. The harassment got so bad - calling him cheap, greedy and so on… that finally the guy quit after a few weeks. (I gather it was not enough to get the guy fired - or how would that look, Bob wins $1M and gets Fred who has no money fired.) ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 31, 2017, 2:04pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/131 "2017-08-31T14:04:10Z")
> [@LSLGuy](#): > > All in all a sound plan. Far better than many. Though I might quibble about not setting up an offshore trust first to own the ticket and then to collect the winnings. > > Ref the snip, unless you’re a lot wealthier than you let on here, the particular guy you use today is probably incompetent to handle that much money. Depending on who he works for they may have a department appropriate to that much money. For sure he can help you avoid avoid gross errors in the first couple months. I used to work for a Wall Street firm with a division called PWM, for Private Wealth Management. AKA People With Money - IIRC minimum to invest was five million. > [@](#): > > As with all this stuff, it really depends on how much somebody wants to maximize their returns on this lump vs. how much they’re content to do something sub-optimal but simpler or safer. Correct. And I am old, cowardly, and cheap - it is much more important to me that I am never old and poor than that I die 50% wealthier than I could be. When I run this fantasy of winning an obscene amount of money in the lottery, I always assume my financial guy can get an ROI of 3% after taxes. Then I figure out if I can live on that. $300 million (or $270 million after charitable donations) is about $8 million a year. I would then live on a million a year and put a million into the safest investments possible to man, and let the rest accumulate. The second year is two million, the third three, and so on up to the point where I never touch the principal. $300 million is enough that I wouldn’t worry about wringing every possible penny of ROI out of my investments. > [@md2000](#): > > These people said that you would not believe the nuts that come out of the woodwork. Not just relatives, or distant acquaintances asking for something - but total strangers knocking on the door, letters from people describing their hard luck, etc. I imagine professional charities would be glad to get your number too. I believe it. And it is a genuine downside. A relative of mine is a professional athlete, and he signed a contract that got him a lot of money - not $300 million, but a lot. It is kind of isolating. One can only talk to family, or other rich people, because everybody else is asking for something. I suppose I would get caller ID and let everyone I don’t recognize go to voice mail where I can delete it, put up a sign saying No Solicitors at the front door, and let Leet the Wonder Dog[sup]TM[/sup] bark at the ones who can’t read. Regards, Shodan ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [August 31, 2017, 2:19pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/132 "2017-08-31T14:19:39Z")
> [@Ornery\_Bob](#): > > First of all, there is no rush to cash in your ticket. You have 180 days (basically six months). > > Plenty of time to hire a financial advisor and lawyer and set up a corporation to claim the prize in a way that keeps you anonymous. > > The woman who won has already proved that she has no clue. Going public is just asking for trouble and from what I’ve read, she’s already having trouble with people showing up at her house. Agree completely that it’s smarter to take your time and get your admin (trusts, secret Swiss accounts :), etc.) all set up before redeeming the ticket. But: 1. It’s a bearer instrument. Even in a safe deposit box it’s not 100.0000% safe. Only 99.9998% safe. 2. $300M in post-tax cash would earn $1M per year or $250K per month per percent APR on your investment return. Given an assumed ROI of 5% annually that’s about $42K per _day_. The winnings don’t accumulate any interest from the date of drawing to the date you redeem. So you’re in effect spending $42K every day you wait to redeem. For sure jumping off half-cocked is dumb. But since time is money you’re definitely spending money all the while you’re spending time. Spend it wisely; don’t waste it. ETA: > [@Shodan](#): > > … > > And I am old, cowardly, and cheap - it is much more important to me that I am never old and poor than that I die 50% wealthier than I could be. > … A wise POV indeed. Were I still 20 it might be a lot harder to keep that in mind for the long haul. But from were I sit today coming up on 60 I agree completely. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [August 31, 2017, 2:22pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/133 "2017-08-31T14:22:02Z")
> [@md2000](#): > > I read an article a while ago where they talked to assorted lottery winners - just the people who won $1M and around that range. A million sounds like a lot, but not really if it has to last you the rest of your life. (In fact, heard recently some DJ on the radio mentioning that he and his girlfriend had won $1M in the lotto - he was still working) Does $1 million really sound like a lot of money to people anymore? Winning $1 million gross in a lottery is roughly $600,000 after taxes depending on state taxes and other taxable income. Depending on your risk tolerance and investment choices, that could provide a reliable real income of perhaps $15,000 to $25,000 per year. No one in America is going to be that impressed with someone living off $15,000 per year. There are 10.8 million “millionaires” in America, or roughly one in 30 people. [A record number of Americans are now millionaires, new study shows](https://www.cnbc.com/2017/03/24/a-record-number-of-americans-are-now-millionaires-new-study-shows.html). I’d imagine in most places in America, if you interact with a couple dozen different people at various stores, coffee shops, and workplaces, you would talk with one or two people a week with a million dollar net worth. Are all those people rich? Even the definition of millionaire seems to be drifting. Last year, I talked with a 19-year-old who referred to someone as a “millionaire,” but he meant someone who earned a $1 million per year. This seems to be the same definition politicians use when they talk about increasing taxes on millionaires. A million dollars ain’t what it used to be. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [August 31, 2017, 2:29pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/134 "2017-08-31T14:29:51Z")
Minor edit: > [@LSLGuy](#): > > … > But: > > 1. It’s a bearer instrument. Even in a safe deposit box it’s not 100.0000% safe. Only 99.9998% safe. > 2. $300M in post-tax cash would earn $1M per year or $250K per month per percent APR on your investment return. … should readBut: 1. It’s a bearer instrument. Even in a safe deposit box it’s not 100.0000% safe. Only 99.9998% safe. **And unlike any sensible investment plan, it’s an all or nothing risk. Losing even a penny means losing the whole enchilada. Oops. :mad:** 2. $300M in post-tax cash would earn [del]$1M[/del] **$3M** per year or $250K per month per percent APR on your investment return.Sorry. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 31, 2017, 2:56pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/135 "2017-08-31T14:56:42Z")
> [@Tired\_and\_Cranky](#): > > Winning $1 million gross in a lottery is roughly $600,000 after taxes depending on state taxes and other taxable income. Depending on your risk tolerance and investment choices, that could provide a reliable real income of perhaps $15,000 to $25,000 per year. No one in America is going to be that impressed with someone living off $15,000 per year. And if you win a million dollars and net $600,000 after taxes, as you said, you could earn $15-25,000 each year, _if_ you don’t spend any of it. But few people aren’t going to buy _something_ (a new car, a new house, that dream vacation you’ve always wanted, gifts for family, etc.) You could spend $100,000 without trying hard (and you’d still have disappointed family and friends). ---
**Author:** ![Chimera](https://avatars.discourse-cdn.com/v4/letter/c/8e8cbc/32.png) [@Chimera](https://boards.straightdope.com/u/Chimera)\ **Post date:** [August 31, 2017, 3:39pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/136 "2017-08-31T15:39:48Z")
Given what some people said above, I thought I should add a bit from the rules of the Powerball and Megamillions; The state in which you win has two weeks from the date of the drawing to collect the money from the other participating states. So, you go in the very next day and claim it, you wait two weeks for the money. You instead wait two weeks or more to claim it, you’ll have the money in your account the next day. This is one reason why many people who win do not claim it immediately. You’ve got two weeks before you can get the money, so take that time to line up some legal assistance, put your valuables in storage or at a relative’s house, prepare for a short ‘not at home’ vacation to avoid reporters and con men, then instead claim it when you’ve got your ducks in a row. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [August 31, 2017, 3:46pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/137 "2017-08-31T15:46:07Z")
> [@Tired\_and\_Cranky](#): > > Does $1 million really sound like a lot of money to people anymore? > > Winning $1 million gross in a lottery is roughly $600,000 after taxes depending on state taxes and other taxable income. … Except in Canada, where the good news is it’s not taxable, so winning a million means winning a million; the bad news is it’s Canadian dollars, so $790,000 in real money. For professional athletes - there’s an episode of 30 for 30 (ESPN film) on youtube. the episode deals with pro athletes who suddenly become filthy rich an don’t know how to handle money (much like winning the lottery). Some guy making $10M a year at age 25 and broke at age 40. (or age 30). The trouble is, people who grew up with nothing are especially susceptible to poor money management. Things like buying momma a house, not thinking that mortgage still has to be paid for 20 years. One fellow said his friends knew exactly when payday was, and were waiting for him when he came out of the office where he picked up his paycheck. How old you are makes a BIG difference for $1M. At age 50 or 60, you’re spreading that over, say, 30 years. At age 20 - you’ve got to spread it a lot more thinly and probably want bigger toys. What’s a millionaire? I figure between the equity on our house and the current value of our combined RRSP’s (IRA or 409 equivalent) my wife and I are worth a bit over a million (Canadian). We’re not rich. We’re well off compared to younger co-workers in having minimal mortgage, 3 incomes (pension from previous job), no dependents, and decent savings. Much of that I attribute to steady savings, plus buying a home and paying it off early, so it accumulated substantially when I did upsize. Based on grossly inflated house prices, I suspect a lot of older people ae in this situation. (My mother bought a tiny bungalow with a great view of Vancouver 50 years ago for $40,000. When she died a few years ago, her husband estimated the house to be worth $700,000 or more. He’ll be rich if he sells - but homeless in an expensive city. Zero sum game. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [August 31, 2017, 6:08pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/138 "2017-08-31T18:08:32Z")
I don’t care what anyone says: I would go with the plan where I watch the ticket all night and then show up early at the lottery office with my nose against the glass when they open. I would just want to be officially certified the winner so I don’t have to stress about it any more. > [@md2000](#): > > These people said that you would not believe the nuts that come out of the woodwork. Not just relatives, or distant acquaintances asking for something - but total strangers knocking on the door, letters from people describing their hard luck, etc. I imagine professional charities would be glad to get your number too. One fellow won almost a million dollars. He tried to keep working, but the guy at the next desk just would not shut up about how he had plenty of money now, he should help him pay off his mortgage. The harassment got so bad - calling him cheap, greedy and so on… that finally the guy quit after a few weeks. (I gather it was not enough to get the guy fired - or how would that look, Bob wins $1M and gets Fred who has no money fired.) Yeesh, almost sounds like at the $1M level it comes close to not being worth the hassle. Whereas with $300M you can obviously hire people to keep hassles away. (Although for someone like my wife, who would want to continue at her job, that could be tough.) Your mother’s husband (widower?) should sell his house and buy a place in [Point Roberts](https://www.zillow.com/homes/for_sale/Point-Roberts-WA/pmf,pf_pt/23671092_zpid/15829_rid/globalrelevanceex_sort/49.012456,-123.010054,48.960975,-123.102322_rect/13_zm/). And I don’t understand how these professional athletes are leaving their mothers stuck with mortgages. Even if they are ignorant, isn’t it simpler to buy outright? Getting a loan involves an extra step or three that I’d think they’d just skip. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [August 31, 2017, 6:50pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/139 "2017-08-31T18:50:52Z")
> [@Tired\_and\_Cranky](#): > > Does $1 million really sound like a lot of money to people anymore? I think the problem is that it does, or even a few million sounding like a super lot of money, to many people. To many people who win these things, and as was mentioned in the anecdote above people they know who are going to start harassing them, gently or less gently, ‘why are you still working here?’, ‘why won’t you help me out?’ etc. To which for $1mil or even few $mil potentially, the answer is that it isn’t really enough to quit working unless you were pretty close in years to doing that already, nor does it give the person the inclination and skills to create their own business and work on their own terms if that wasn’t in their nature previously. It seems to me in stories or even studies of lottery horrors a lot of the bad cases are in that zone where it really isn’t enough to quit working, let along quit working and greatly increase spending. At $300mil (or even $10’s of mil probably for most) you don’t have that problem. Being isolated from your former life though, probably. And some extreme individual could still squander $300mil I’ve no doubt. Some infamous cases are at least in that range (including entertainers or athletes who earned that kind of money cumulatively). But it doesn’t seem that paradoxical to me if many people who win a million or few end up unhappy or with distinctly mixed feelings. ---
**Author:** ![Corry\_El](https://avatars.discourse-cdn.com/v4/letter/c/ecae2f/32.png) [@Corry\_El](https://boards.straightdope.com/u/Corry_El)\ **Post date:** [August 31, 2017, 7:20pm UTC](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747/140 "2017-08-31T19:20:37Z")
> [@Dewey\_Finn](#): > > And if you win a million dollars and net $600,000 after taxes, as you said, you could earn $15-25,000 each year, _if_ you don’t spend any of it. But few people aren’t going to buy _something_ (a new car, a new house, that dream vacation you’ve always wanted, gifts for family, etc.) You could spend $100,000 without trying hard (and you’d still have disappointed family and friends). True, and also on what you could take out of a lump sum every year we’re kind of going around in a circle since there’s the annuity option to begin with. A Powerball style 30 yr (years 0-29) payout increasing 5% a year means the first year’s pay out on a $1mil is $15k. The 5% increase as mentioned is not to do the winner any favors but make the payout look bigger than it really is by shifting more of it to lower present value dollars further out. But, besides expected inflation of say 2%, there might also be some tendency to rely more on the supplemental income in later years, or anyway it’s less painful to increase than decrease the real payment. That’s based on the recent giant Powerball’s IRR of 2.71%, which will come back to a familar discussion/argument where a lot of people think ‘their guy’ or they themselves can definitely earn more than that after tax\* which is certainly possible but only with risk of doing much worse. The rate they offer you is not a bad deal for low risk, comparing to long term muni bonds, which represent a similar risk for a similar (actually a bit lower) return. If your life expectancy is a not much longer or shorter than 30 yrs, the pay out they’d give you is a reasonable measure of how much the money would change your life. For the median US household, nice but not dramatic at $1mil, only totally replaces working at several mil, only catapults you to a much higher standard of living without working closing on in $10mil. Though of course all depending on preference, how much do people make now, how much do they like/hate working now, do they already have a well thought out plan to be in business for themselves, are they in fact much older and don’t have to spread the money over many years, etc. \*2.71% is effectively an after tax return, being the relationship between either the pre tax lump and pre tax annuity payments or the after tax lump and after tax annuity payments as long as you assume the tax rate is the same on lump as annuity payments. That wouldn’t be as true for a smaller payout, but anyway generally speaking you have to beat that IRR _after tax_. [Previous page](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747.md?page=6) [Next page](https://boards.straightdope.com/t/if-you-win-the-powerball-where-do-you-temporarily-put-the-money/794747.md?page=8)