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Lottery winner lost money after investing funds

Topic closed. 63 replies. Last post 7 years ago by Littleoldlady.

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maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
Massachusetts
United States
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April 14, 2006
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Posted: January 22, 2010, 5:51 pm - IP Logged

Over half of all start up businesses fail and I bet the ratio of bad investments in the stock

market is higher. I'd rather give my money to investment companies like Fidelity than going

 it alone. Though Fidelity - and I dont work for Fidelity!- will charge a hefty fee, I think it's

 worth it because they have a wide network of connections and lots of investing experience.

    Velocity's avatar - Gin
    PA
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    Posted: January 22, 2010, 6:10 pm - IP Logged

    If that's the case, then why don't people just save their money instead of depending on the stock market for their retirement. Those that can't rebound from losing all their money at the downturn, I'm sure, wish they hadn't of put their money in the market.  I know investing is great for some people, but I'll play with my own money, save it in a bank, or buy a safe and keep it at home before I EVER put it in the stock market. My nerves would be shot, watching my money fly out the window in the stock market, especially since the stock market lost over 500 points in the last 3 days.  I believe we haven't seen a true crash in our lifetime yet, and it's bound to happen, the news makes it look like things are looking up, but I think they are trying to buy time, I guess time will tell.:)

      Set4life's avatar - 2554
      East Hampton, NY
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      June 25, 2006
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      Posted: January 22, 2010, 6:37 pm - IP Logged

      props to him for buying a Malibu!Coffee

           $Group Hug$

           FOR THE WIN!

        bashley572's avatar - starwars14
        West Side of Sunny Florida
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        September 8, 2007
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        Posted: January 22, 2010, 6:50 pm - IP Logged

        props to him for buying a Malibu!Coffee

        Buying American... nice!!

        He sounds like he will do fine.  We should be hearing about him for a LONG time as he grows his new found wealth.

        Money won is twice as good as money earned!

          hearsetrax's avatar - 0118

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          May 21, 2007
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          Posted: January 22, 2010, 7:36 pm - IP Logged

          unlike most kids his age he seems to have a good sense.....

          I just hope he remains level headed and learns to appreciate things even more

            AceKicka's avatar - Lottery-057.jpg
            Triad, N Carolina
            United States
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            June 24, 2007
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            Posted: January 22, 2010, 7:54 pm - IP Logged

            This guy seems to be okay - but he needs another vehicle (and I don't mean another Malibu) to earn interest.

            My question is -- how much interest or profit does he (or anyone) need to make? I'll tell you what, I'm available as a financial adviser right now.

            It is STUPID to invest in ANYTHING, market or otherwise that can turn down on a whim. I'm a hands-on type of guy. There's NO doubt that I can make ANYBODY $$$$. But the market and all the rest of the norm is crap.

             

            ~Ace

            "Game On.......'CAUSE ACE HAS YOUR NUMBER!!"

                                                                                      -- (AceKicka '07)

              dopey7719's avatar - Lottery-049.jpg
              Midlands, SC
              United States
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              January 14, 2009
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              Posted: January 22, 2010, 7:55 pm - IP Logged

              At least when he graduates he won't have student loans hounding at his back.  Unlike many, he gets to finish college without all of the debt.  Good 4 him!!!  He will be blessed again...he's a good kid with a good head on his shoulders.

                WilliamJohns's avatar - Trek HAND3.gif
                Connecticut
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                December 12, 2009
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                Posted: January 22, 2010, 8:05 pm - IP Logged

                Again...70% of lottery winners go bankrupt within 5 years of winnng the money?

                 

                Another shocker is that the "financial advisor" quoted in the article said you'd do better to take the annuity then to take the lump sum - I've never heard that before.

                 

                Please enlighten me.

                  time*treat's avatar - radar

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                  Posted: January 22, 2010, 8:13 pm - IP Logged

                  The annuity is better (for some people) because you are not putting all your money at risk in any single thing.

                  With the annuity option, if you make an "investing" blunder this year, you still have another check coming next year.

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

                    LadyMylena's avatar - avatar6 1.jpg
                    Kansas
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                    December 19, 2009
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                    Posted: January 22, 2010, 8:26 pm - IP Logged

                    If that's the case, then why don't people just save their money instead of depending on the stock market for their retirement. Those that can't rebound from losing all their money at the downturn, I'm sure, wish they hadn't of put their money in the market.  I know investing is great for some people, but I'll play with my own money, save it in a bank, or buy a safe and keep it at home before I EVER put it in the stock market. My nerves would be shot, watching my money fly out the window in the stock market, especially since the stock market lost over 500 points in the last 3 days.  I believe we haven't seen a true crash in our lifetime yet, and it's bound to happen, the news makes it look like things are looking up, but I think they are trying to buy time, I guess time will tell.:)

                    My money will be staying at home, too. 

                    My step-dad plays around some with the stock market game. That wasn't all that bad, until the economy really went South and he lost a lot...... and then I find out he is still playing with it!!! That is crazy!! Some people are a glutton for punishment. 

                    My dad had stock in the bank he worked for all his life, and he nearly lost everything he had last year.

                    I will invest in lottery tickets. LOL

                    "I believe we haven't seen a true crash in our lifetime yet, and it's bound to happen, the news makes it look like things are looking up, but I think they are trying to buy time, I guess time will tell."

                    You're not kidding, Velocity. They can make anything look the way they want on paper, and with the media. "It's getting better" ...yea right. It's not getting better around here, and it's not going to. If they can convince everyone that they can make a difference with the economy (which they are trying to do), if they go out and invest what they have left, they will do it. Then they can bring in the wrecking ball, and finish us off. The crash is still coming, I'm sure of it.  Frown

                    Luck is  ** believing  ** you're lucky.” ~Tennessee Williams

                    Money is neither my god nor my devil. It is a form of energy that tends to make us more of who we already are, whether it's greedy or loving.  ~ Dan Millman


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                      Posted: January 22, 2010, 8:39 pm - IP Logged

                      Ah, but quite the contrary.. You have investments (same as bets) that Coca Cola is a good company and will continue to earn profits. (Retuturns on your investments, or winning a bet) On the contrary, if Coca Cola's sales are down, and their stock tanks, you end up losig $$$. No difference in betting on the Colts or Jets this week. In fact at least with betting, I am always aware of my risk/return, not so with the market...

                        bashley572's avatar - starwars14
                        West Side of Sunny Florida
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                        Posted: January 22, 2010, 9:25 pm - IP Logged

                        Ah, but quite the contrary.. You have investments (same as bets) that Coca Cola is a good company and will continue to earn profits. (Retuturns on your investments, or winning a bet) On the contrary, if Coca Cola's sales are down, and their stock tanks, you end up losig $$$. No difference in betting on the Colts or Jets this week. In fact at least with betting, I am always aware of my risk/return, not so with the market...

                        I will take the Jets ST8 up **no points!!

                        Money won is twice as good as money earned!

                          Think's avatar - lightbulb
                          Marquette, MI
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                          Posted: January 22, 2010, 10:43 pm - IP Logged

                          70% of lottery winners go bankrupt within 5 years?

                          Whoa, I never heard that one before.

                          Did you know that 70% of statistics are made up on the spot??

                          Notice how no source was quoted on that statistic???

                            trenticle's avatar - 1992 TheEndComplete.jpg
                            New Member
                            Houston, TX
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                            January 22, 2010
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                            Posted: January 22, 2010, 10:48 pm - IP Logged

                            I totally agree.  The financial experts all say that "You should take the lump sum."  Wrong.  Financial experts should take the lump sum.  Average Joe needs a learning curve.  This kids poor investment decisions cost him 34% loss his first year.  Now the money its costing him in accounting fees, poor tax decisions and more poor investment decisions, he will probably not turn a profit for another 4 years.  By year 5, he will have probably lost TOTAL another 34% of the $330,000 capital he has left, leaving him around $217,800.  Now, at year 6, he has learned from his mistakes and can now make profitable decisions.

                            So, if got the annuity, then its $1,000,000.00 over 25 years, that's $40,000 a year, less 15% state tax, less 20% fed income tax.  Now we're at $27,200.00..  I lose 34% the first year due to bad investments thats $17,952.00. 

                            The next 4 years I make bad decisions due to accounting fees, poor tax decisions and poor investment decisions.  So, of the $153,952.00, I'm down to $101,608.32.  Now starting year 6, I have half as much money as Average Joe who got the lump sum.  However, I still have 20 annual payments left.

                            Once you annuitize the 20 years of interest plus additional annual payout,  I think you would be better off taking the annuity.  But my BA-25 calculator is in the trunk of my car, its late, and I'm not going to get it now. 

                            I'd like to hear what others think!

                            -Lou

                            P.s. I am chalking up the fact that he gave out huge sums of cash to family as poor investment decisions as well.

                              Think's avatar - lightbulb
                              Marquette, MI
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                              Posted: January 22, 2010, 10:52 pm - IP Logged

                              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.

                              Alternatively the moral is:  if you win, win big so that you can just stuff all the money in a whole lot of insured money markets.  I still believe that 500,000,000 to 600,000,000 dollar jackpots for a young person negate much of the need for investment planning.  You  would still need to plan on how to allocate disbursements over 65 to 70 years though.

                              (I personally don't need jackpots that big.)