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Lottery winner lost money after investing funds

After the Big WinAfter the Big Win: Lottery winner lost money after investing funds
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BALTIMORE, Md. — A Towson University student who hit it big on a Maryland Lottery scratch-off ticket said he's found out that a seven-figure prize is not necessarily a ticket to early retirement. 
 
  In many ways, Louis Jay's apartment is your typical college bachelor pad, but upon closer inspection, 11 News reporter Kerry Cavanaugh said the 21-year-old student has a state-of-the-art home theater system and stocks only top-shelf alcohol. She said he spends hours online tracking the stock market. 
 
  Cavanaugh said Jay has quite a portfolio to maintain since he bought a scratch-off lottery ticket on his 19th birthday that yielded him $1 million. 
 
  Jay took the seven-figure prize in a lump-sum payment. By the time he set aside 10 percent for charity and gave $10,000 each to his parents and several other relatives, he said he still had a healthy nest egg left over. 
 
  "After that, it was about $500,000 to $530,000. Of that, a good chunk was stocks and bond and the rest was low-risk, short-term investments so I could have cash on hand," Jay said. 
 
  The college student used that cash to splurge on a new car, a modest Chevy Malibu. 
 
  Jay said he was aware of the studies that showed that 70 percent of lottery winners go bankrupt within five years and said he didn't want to become a statistic. He was careful to limit his spending and thought he was safe investing the bulk of his winnings in the stock market. 
 
  "The one sour note to this is I invested four months before the big downturn, so I made a little bit of money, then lost a bunch of money," he said. 
 
  The $500,000 he originally invested is rapidly disappearing. 
 
  "I have $330,000, or something like that," Jay told Cavanaugh. 
 
  "What he really needs now is a recovery strategy. Statistically, it's been proven that big lottery winners wind up poor in a relatively short time unless they took the annuity payment," said financial analyst Brian Kronenberger, who has worked with a number of lottery winners. 
 
  Kronenberger said Jay was smart to take the lump sum and invest it because he's young and he can afford to wait years for the market to rebound. 
 
  Jay hired a financial team to handle his money so he can focus on finishing school. His adviser, Dr. Doug Sanford, guided Jay as he changed his major from computer science to business — a decision spurred in part by his lotto winnings. 
 
  "I give Louis a lot of credit for keeping grounded," Sanford said. 
 
  He said he hasn't seen any changes in the 21-year-old's demeanor, goals or attitude as the money has fluctuated. 
 
  "I haven't seen any change in him. I don't think he's a person who views himself as being founded in money. He's founded in his efforts and ability, and those do not go away if the market tanks," Sanford said. 
 
  Jay said he's currently enjoying his final days on campus and is gearing up to spend the spring semester in Europe — studies that he financed by his winnings. 
 
  He said he's thankful for opportunities like that, even if he can't afford to permanently upgrade his lifestyle. 
 
  "I can't really be too mad because I got it as a blessing, almost. Seeing it taken away, I didn't have much control in that, either," Jay said. 
 
  While he waits for his winnings to rebound, Cavanaugh said he's still buying those scratch-off tickets.

http://media.lpimg.com/2010012201.mp4

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63 comments. Last comment 5 years ago by Littleoldlady.
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rdgrnr's avatar - walt
-Ridge Runner- Oracle of the Appalachians
Way back up in them dadgum hills, son!
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Posted: January 22, 2010, 9:34 am - IP Logged

70% of lottery winners go bankrupt within 5 years?

Whoa, I never heard that one before.


                                             
                     
                                         

 

 

 

 

                                                                                                   

"The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                            --Edmund Burke

 

 

    plus40's avatar - chi jpeg.jpg
    New Member
    Atlanta, GA
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    January 20, 2010
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    Posted: January 22, 2010, 9:37 am - IP Logged

    I'm sorry he's lost so much of his winning and I hope he gets it all back. 

     

    He seems like a smart kid.  He'll be alright.

      dphillips's avatar - littleuns
      Albuquerque, New Mexico
      United States
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      June 18, 2004
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      Posted: January 22, 2010, 9:50 am - IP Logged

      Although age is on his side, even then, he should have left the stock market alone -- leaving the money in the bank until he could get his bearings. What was wrong with investing conservatively?

      I am surprised he did not go for the annunity: at least he would have a yearly income and not every winner can handle a fistful of dollars.

      Finally, he has some money left and he is not flat out broke!  I hope he learned from his risky investments.

      See Ya!-- Bye, bye!  When you win, may you glow as brightly as theSun Smiley

        Avatar
        Qabloc!zewana
        Neutral Zone
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        Posted: January 22, 2010, 11:40 am - IP Logged

        This is a great lesson for the "kid".  He'll be rich(er) in life.

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          New Member
          Tucson, Arizona
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          July 16, 2009
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          Posted: January 22, 2010, 12:08 pm - IP Logged

          Oh, poor, poor boy.  He only has $330,000 left?  What is he going to do, somebody help him?  You know what, I'll take the $330,000 if he's not sure what to do with it.  Maybe he's just too young to appreciate the value of money, but $330,000 dollars is still a lot of money these days, more than most people have considering the economy.

            Todd's avatar - Cylon 2.gif
            Chief Bottle Washer
            New Jersey
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            May 31, 2000
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            Posted: January 22, 2010, 12:16 pm - IP Logged

            Oh, poor, poor boy.  He only has $330,000 left?  What is he going to do, somebody help him?  You know what, I'll take the $330,000 if he's not sure what to do with it.  Maybe he's just too young to appreciate the value of money, but $330,000 dollars is still a lot of money these days, more than most people have considering the economy.

            I think the point of the article is that even a lottery winner with a good head screwed on his shoulders, who invests the money fairly wisely instead of just blowing it, can still lose a substantial chunk.

            Think of it as a moral to the story:  if you win, even if you keep your head, be prepared to lose.  But if you lose your head, you are certain to lose it all.

             

            Check the State Lottery Report Card
            What grade did your lottery earn?

             

            Sign the Petition for True Lottery Drawings
            Help eliminate computerized drawings!

              TheGameGrl's avatar - p42a
              Pennsylvania
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              Posted: January 22, 2010, 1:46 pm - IP Logged

              Accurately stated Todd.

              Except for the invest part. One cant lose that which they do not place up for risk.  Some material gains are just not worth it...better to be safe then sorry.

              ________________________________

              Signature quote-If I'd agree with you , we'd both be wrong.

                four4me's avatar - gate1
                MD
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                Posted: January 22, 2010, 1:53 pm - IP Logged

                He started his investments when the stock market was doing good then when it went belly up he should have pulled his money out, a good investor would have taken care of the cash since he invested so much of it.

                I know people who have lost more than half of their stock portfolio's.

                Big John says. You don't hit the number. The number hits you!!!!

                               I'm not Big John, I'm Four4me, Big John's a friend.
                  ThatScaryChick's avatar - AbnSTiA

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                  Posted: January 22, 2010, 2:45 pm - IP Logged

                  It sounds like this young man has a good head on his shoulders and just lost his money like so many others who invested in the stock market did. At least he has some of the money from his win left. It could have been worse, he could have none! Hopefully, he puts his money in something safer, so he has that money for the future.

                  "No one remembers the person who almost climbed the mountain, only the person who eventually gets to the top."

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                    Posted: January 22, 2010, 3:26 pm - IP Logged

                    Looks like the lottery was a better "investment" than the stock market! Anyone who tells you the market isnt gambling, is simply lying to you. The only difference btw the market and a casino is that a casino has rules. But in fairness to him, this could have happened to anyone. But since it was a lottery winner, and not for ex. a person who inherited a large amount of $$ and then lost it in the market, it became news on how 70% of lotto winners end up broke..

                      Velocity's avatar - Gin
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                      Posted: January 22, 2010, 3:47 pm - IP Logged

                      Can anyone tell me why they would put their money in the stock market, EVER?  Considering these people in these banks can't do right with Federal money, do you really think they'll do right with your money?  Take your losses and get out now before you have nothing left.

                        time*treat's avatar - radar

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                        Posted: January 22, 2010, 4:00 pm - IP Logged

                        It's been drummed into our heads for generations that the stock market is the most 'respectable' place to 'invest'.
                        Few bother to ask why this is so or what else is out there.

                        We know a profit is made when you sell higher than you bought, but no one ever explains what the final buyer of that stock gets for their trouble any more than they explain why most people bother with a grass lawn. Crazy

                        In neo-conned Amerika, bank robs you.
                        Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

                          Rowen's avatar - animal eel.jpg
                          Illinois
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                          Posted: January 22, 2010, 5:17 pm - IP Logged

                          Can anyone tell me why they would put their money in the stock market, EVER?  Considering these people in these banks can't do right with Federal money, do you really think they'll do right with your money?  Take your losses and get out now before you have nothing left.

                          The Stock Market is still your best bet for retirement especailly if you're still young enough to recover from downturn. Imagine if he had invested his money 4 months after the downturn instead of before. He would have double his money on the rebound. He's a smart kid. He'll be fine

                            fwlawrence's avatar - Yavill
                            Austin
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                            Posted: January 22, 2010, 5:41 pm - IP Logged

                            Looks like the lottery was a better "investment" than the stock market! Anyone who tells you the market isnt gambling, is simply lying to you. The only difference btw the market and a casino is that a casino has rules. But in fairness to him, this could have happened to anyone. But since it was a lottery winner, and not for ex. a person who inherited a large amount of $$ and then lost it in the market, it became news on how 70% of lotto winners end up broke..

                            The stock market is not gambling. You are buying part of a company. Take Coca-Cola for example. I own a very small part of that company. It may not always do well, but the company is still there. Gambling takes place in a casino. You go into a casino pretty much expecting to lose money. You are paying for the experience, not so in the stock market.