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What would the experts do with a lottery jackpot?

Topic closed. 65 replies. Last post 11 years ago by sirbrad.

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sirbrad's avatar - Lottery-062.jpg
PA
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Posted: March 12, 2006, 7:43 pm - IP Logged

I am not sure, but I think someone said that the IRS continues to take a certain percentage of your money year after year, even if the principal is not accumulating interest? If so, that is a load of crap, especially 10% of whatever it was. That would mean that if one won 20 million dollars after all taxes, they would then be paying out a whopping $2 million the next year.

Assuming the did not spend much, then the next year they would be paying out 1.8 million, then 1.6 million, etc. At this rate you would very quickly dwindle down to nothing. I highly doubt this is true, even though I would put nothing past the IRS, because your jackpot would be gone and you could never save your own money.

Squandering my butt, you won the jackpot, you paid the tax, it is yours, no one elses. I would sooner take all the money out of the bank and stash it away in a large safe before I would pay 10% every year of it and little by little deplete myself dry. Some day I am going to have call the IRS to find out the facts. If this would actually be true, I would stop playing the lottery. But I believe that you are taxed twice, and that is it. After that is no longer income.

    sirbrad's avatar - Lottery-062.jpg
    PA
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    Posted: March 12, 2006, 7:52 pm - IP Logged

    There really are some good comments in this thread and I thank everyone who participated.

    @TheGameGirl:

    I completely understand where you are coming from.  I had a very agressive portfolio pre 9/11 and I lost my happy little a** after the attack.  The fund never fully recovered.  I too think Real Estate is an excellent investment.  But agin I think one needs to hedge one's bets with diversity (other investments) and be very selective about the Real Estate that is bought.  

    @SirBrad:

    I completely agree with you too.  One cannot put a price on mental or financial stability.  

    After making the right choices for your finanical security (whatever they may be) the thing that concerns me the most about winning the jackpot is protecting your privacy.  Once you are tagged with the epithet Lottery Winner you become a target for every con artist...criminal and mooch (relative, legitimate charity or otherwise) in the world.  and let's not forget all the Ralph Kramden's in the world with their hair-brained get rich quick schemes.  Protecting your financial investments is critical but so is protecting your privacy (i.e. security). 

    That's why I strongly believe that any investment plan you have should include re-location to a "gated' community.  It doesn't have to be an ocean front estate.  And it doesn't have to be in Palm Springs or Fort Lauderdale.  There are plenty of "upper middle class" gated communities in the country. 

    The bottom line with me is...not only is mental and financial stability priceless...but so is your personal security.  So...invest in a safe and secure home with an excellent security system.

    Jim 

     

    Well said, I also agree that security is of prime importance. That is why I am glad I live in a dead town in the middle of nowhere. I would definitely live in a gated type of community, but I would have to build my own, this area is too dead and does not even have them.

    Although it still would not be necessary here, I know some jackpot winners who won about 60 miles away in a more populated area, and have yet to have any  trouble. I would at least go to a higher elevation, and create some place. Probably just moving to a local golf community where all the rich people live would be sufficient enough, I would blend right in well, even though I would be a lot richer than they are.

    However I would blend in, and not look much richer than they were. Precautions are good, but as I said awhile back, paranoia in itself would most likely be more of a problem than any actual circumstances occurring. It is also depends on a lot of other factors, who you know, where you live, how much family, etc.

      Uff Da!'s avatar - InCelebration 001.jpg
      Washington State
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      Posted: March 12, 2006, 9:38 pm - IP Logged

      sirbrad said:

      I am not sure, but I think someone said that the IRS continues to take a certain percentage of your money year after year, even if the principal is not accumulating interest? If so, that is a load of crap, especially 10% of whatever it was. That would mean that if one won 20 million dollars after all taxes, they would then be paying out a whopping $2 million the next year.

      That's incorrect.  You pay income tax on income.  Assuming you invested much of your winnings and had taxable income of $2,000,000 the next year, you'd pay taxes on the $2,000,000.    But you wouldn't be paying two million in taxes. 

        justxploring's avatar - villiarna
        Wandering Aimlessly
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        Posted: March 13, 2006, 1:08 am - IP Logged

        sirbrad said:

        I am not sure, but I think someone said that the IRS continues to take a certain percentage of your money year after year, even if the principal is not accumulating interest? If so, that is a load of crap, especially 10% of whatever it was. That would mean that if one won 20 million dollars after all taxes, they would then be paying out a whopping $2 million the next year.

        That's incorrect.  You pay income tax on income.  Assuming you invested much of your winnings and had taxable income of $2,000,000 the next year, you'd pay taxes on the $2,000,000.    But you wouldn't be paying two million in taxes. 

        Agree with Uff Da!  If you take a lump sum and pay all the taxes due, then you won't be paying more tax on the original jackpot.  Regarding taxable income, if you put your money in tax deferred investments, you will be accumulating interest, but only have to pay on what you withdraw, so I would only put my hands on money I plan to spend. It will grow faster when you don't pay taxes on it! I don't know most of the games, since I'm not wealthy, but I realize there are many ways people avoid taxation with legal shelters.

        Oh, I Googled "Uff Da!" out of curiosity to see if it meant anything, and I just learned something new  Live & learn.  Are you from Minnesota? :) One site says "In Norway, Charlie Brown says, "Uff da!" instead of "Good grief!"  

        What would I do without the internet? Crazy

         

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          Posted: March 13, 2006, 1:29 am - IP Logged

           

          What would I do with a lottery jackpot? ... I’d stay out of the stock market. Did I say that? Yep, sure did, no playing the markets with my winnings. 

          "But wait", says the high priced financial advisor I have consulted ..."One must have stocks for a well rounded portfolio! Without stocks, you’ll be missing growth opportunities. Just look at the historical trend and see how the markets have done over the long haul."

          "Not to worry," he'd say, "No need to lose sleep participating in the markets. Just diversify, that’s right, ultra-diversification is the key ...let's consider an index fund." He goes on to say ... "As your advisor, I must strongly suggest that you have a good percentage of your assets in stocks or mutual funds for a proper portfolio."

          I’d quietly leave the office and find a new financial advisor ...no stocks for me.

          ... the lottery never fails to surprise!
            sirbrad's avatar - Lottery-062.jpg
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            Posted: March 13, 2006, 1:46 am - IP Logged

            "Agree with Uff Da!  If you take a lump sum and pay all the taxes due, then you won't be paying more tax on the original jackpot."

             

            That is what I thought. Such taxation as some people claim would be ludicrous, and illegal. The IRS is already greedy enough as it is.