The only way I would opt for the instant 3 million is if someone I cared about was sick or something and needed more money than we could otherwise obtain. Other than immediate death, or illness leading to it, I would take the 20 million.
I’ll even go a year without human interaction, surviving in the wilderness off berries for a year, then come back and take the money.
With 0% fed rates its unlikely. But when they go back to 3% it should be easy.
Either way, if you are in a family earning 80k a year gross income, about 30k will go to taxes & retirement savings, leaving 50k. Of that 50k about 15-25k will probably go to a mortgage, car payments, student loans and credit card debt. Eliminate those and 30k a year tax, retirement savings and debt free can get you an 80k lifestyle. And I don’t need an 80k lifestyle since I have no kids.
So personally I wouldn’t ‘need’ the 20 million, but it’d be nice to have to donate to causes I believe in.
I can’t believe anyone would take the money now. Seriously, you can’t wait six months for seventeen million dollars? If your money management skills, not to mention your ability to handle delayed gratification, are that weak, you’re probably going to blow all the money you receive anyway.
That is unless you’re homeless and die from exposure. Or get TB from the guy at the homeless shelter. Or get robbed and beaten up by one of the drunks at the homeless shelter. Or get arrested from walking the streets at night from not having a home and wind up in jail, where you get raped and contract HIV.
Well you get my point.
I’ve been homeless and it’s not pleasent at all. You can get hurt or wind up in jail very easily. And you don’t want that, 'cause 20 million ain’t gonna help you if you’re in jail in six months or have to deal with some sort of health issue, whether it’s TB or a snapped neck.
But unless you’re completely destitute yes, I would wait 6 month.
As another poster said, 3 million isn’t a lot. Over ten years that breaks down to 300,000 which isn’t even a nice townhouse in Chicago.
And six months ain’t long to wait, if you got even a cheap flat and such.
In your impossible imaginary hypothetical it is easy: I’d wait and take the $20 million.
But in any real life scenario this “guarantee” that the money will be there in six months is not really a guarantee. In the case of a reputable organization such as a state lottery I may be inclined to wait and take the $20 million, thinking that the risk is negligible (but not zero!). However, in the case of a “guarantee” from a random guy on the internet, I think I might just take the $3 million and run!
In your scenario the only correct choice is to wait for the $20 million. Taking the $3 million now makes absolutely no sense whatsoever.
If it was $3 million now or $20 million in 20 years or 10 years, that would actually give a real choice. Or $3 million now vs. $4 million in 6 months. No one sane would throw away $17 million for a measly 6 months.
Oh, $3 million is plenty. Just doing some back-of-a-napkin number crunching with some local real estate, I could buy three properties (seven units) flat out, get almost $10,000 a month in income, and have a million left over for other investments and that Lotus Exige I’ve had my eye on.
Of course, with $20 million and a bit of leverage, I could live in downtown Lahaina, fly to Aspen whenever I felt like skiing, and buy a Lamborghini Murcielago.
I could be fantastically wealthy NOW, or fantastically wealthy six months from now. Either way my life with 3 million dollars is not any different from my life with 20 million dollars. I’d take the 3 million.
ETA: to me, this is like asking “do you want a kajillion zillion dollars now, or do you want to be broke for 6 months, and then get a kajillion zillion JILLION dollars?”
Pfft, I don’t need your measly pocket change, I’ve got this guy on the other line who wants to give me $524,352,525.00 as soon as we deal with some administrative hurdles. Oh, all right, as long as it comes with a written and notarized guarantee I guess I’ll take the $20,000,000 just in case that Nigerian prince business doesn’t pan out. Where do I sign?
On a related note, when I was 10 years old I won a very decent amount of cash (Well, for a ten-year-old in the 80’s, that is.) in a lottery, say $100. It wasn’t in dollars of course, but about that level of value. Anyway, I was offered by a family member that if I’d entrust the money to them for safe-keeping for one year they’d give me twice the amount when the year was up, presumably with the hope that a year’s wait would make me mature a bit and make me able to make wiser investments, and I promptly declined the offer. But as I already had the money in my hand by then and had probably spent half of it in my head already it felt like giving too much up, and as mentioned I was 10 so my financial acumen wasn’t all that great. Of course, with the value of money these days I’d probably make the exact same choice now, but for entirely different reasons.
I’d definitely wait six months. At the absolute worst, the fact that you have $20 million coming in six months means you could just borrow money until then, and the person lending you money could rest assured in your ability to pay it back.
I’d be very tempted to take the $3 mil. I don’t know for sure that I’m going to have a house in 6 months. The only reason I can think of to take the $20 mil is if I can figure out a way to use the guarantee to get some money to get me by. I’m sure there are other people who are not in as dire financial straits as myself and would loan me the money if I were to offer a really good return.
Still, I don’t think people who would take the $3 mil are crazy–if their system involves not blowing it right away. While it surprises a lot of people, there are those who simply don’t value money so much. Heck, even with $20 mil I’d probably be giving at least half away, and wouldn’t feel right giving myself more than $100,000 a year. Not giving anything away, I could live lke that for 30 years on $3 mil. (Though I’d probably bump it down to $75,000 a year, so it’d last 40 years.) And none of this is taking investment into account.
I would wait and take the 20M, as long as I could trust that I would really get the money after the 6 month period. These things aren’t as simple as someone might think, though. The value of money is in what it can get for you, and the quality of life improvement over your current situation it’ll allow. I would not wait 6 years for the 20M for example. 1 million for a billionaire is worth less than 1 million to a poor person.
For example let’s say someone tells an average worker that they can have 100 million at a 100% chance, or 10 billion at a 20% chance. If you go by the expected payoff, you might think that the correct answer is to take the 10 billion, as you’ll get 20 times as much money from it on average.
However I would think almost anyone would go for the guaranteed 100 million and rightly so, as the quality of life improvement between getting 10 billion compared to 100 million isn’t worth the 90% risk that you end up with nothing. If I already was a billionaire, I would take the 20% chance of 10 billion.