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Interest on Lotto winnings?

Topic closed. 18 replies. Last post 9 years ago by justxploring.

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MissNYC's avatar - diva
Westchester, New York
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Posted: December 11, 2007, 4:06 pm - IP Logged

OK...we all know that we earn interest on our money in the bank, which usually isn't much. My question is, lets say tonight, I win the mega millions jackpot and I decide it would be easier to just put it in the bank. On average, how much would I make a year in interest with the lump sum of close to 50 million? How would it be different if the money was invested?

"If you just keep believing, that dream that you wish will come true"

Bed

 

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    Posted: December 11, 2007, 4:16 pm - IP Logged

    I'm just as curious as you, as I have no real clue. But I would guess you could make close to 400,000 a year in interest with safe investments. I'm sure a person would make more than enough to live a comfortable life year in and year out on interest alone.

    EXMECHANIC

    "My dollar buys hope, what does yours do?" 

      LuckyLilly's avatar - savy chick.png

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      Posted: December 11, 2007, 4:35 pm - IP Logged

      I've seen passbook savings accounts at 5%.  However, I have no idea if you can get more if you have huge amounts in just regular savings.  I suspect you can't.  So if you get 50 mil AFTER taxes and put it into a 5% savings, that's 2.5 mil per year in interest alone.  But you'd have to pay taxes on that income.

        RJOh's avatar - chipmunk
        mid-Ohio
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        Posted: December 11, 2007, 5:25 pm - IP Logged

        I've seen passbook savings accounts at 5%.  However, I have no idea if you can get more if you have huge amounts in just regular savings.  I suspect you can't.  So if you get 50 mil AFTER taxes and put it into a 5% savings, that's 2.5 mil per year in interest alone.  But you'd have to pay taxes on that income.

        You could put your money in CD which usually pay more than a saving account.  Banks will only insure your accounts for $100K but some banks participate in a plan where the CD are shared by other banks which allow more of your money to be insured but you should talk to a financial adviser to get the facts.

         * you don't need to buy more tickets, just buy a winning ticket * 
           
                     Evil Looking       

          time*treat's avatar - radar

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          Posted: December 11, 2007, 5:36 pm - IP Logged

          OK...we all know that we earn interest on our money in the bank, which usually isn't much. My question is, lets say tonight, I win the mega millions jackpot and I decide it would be easier to just put it in the bank. On average, how much would I make a year in interest with the lump sum of close to 50 million? How would it be different if the money was invested?

          With 50 mil, you could shop around for competitive interest rates on a 1 year CD. Banks compete ...

          Investing your money (which is what the banks do with your CD deposit, that's where they get the interest from to pay you) yourself may give you more or less return on your money than a Certificate of Deposit. The other difference is that you lose the set-and-forget convenience of parking it in a bank.

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

            justxploring's avatar - villiarna
            Wandering Aimlessly
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            Posted: December 11, 2007, 6:47 pm - IP Logged

            You could put your money in CD which usually pay more than a saving account.  Banks will only insure your accounts for $100K but some banks participate in a plan where the CD are shared by other banks which allow more of your money to be insured but you should talk to a financial adviser to get the facts.

            RJOh, I agree with you, and banks often have partners, but you can have a lot more than $100,000 in a bank.  You need to have qualifying beneficiaries however.  But if you have children, siblings, etc., you can leave them each $100,000.  This also helps to avoid probate because it then becomes a revocable trust, although each state handles wills & trusts differently.  I believe this information is available on the FDIC website.

            Investing $50 million is too complicated to explain in a post. If anyone here can do it well, then he/she probably isn't running around buying lottery tickets to win a jackpot. That's why I always advise people to seek professional counseling from an attorney, but you need to carefully check out his/her credentials, which isn't always easy.  I mean, how many of us know people with millions to ask for a reference? 

            There is a site I've used called BankingMyWay and you type in your zip code and how many miles you are willing to travel.  It lists the banks in your area and the current specials on CDs, savings, checking and also the local credit unions.  Credit unions often pay higher rates than banks and they are also insured. You can also open an account online anywhere, although I would never go out of the United States.  You don't need to be rich to want the best rate.  Once I opened up an account in Omaha and I live in Florida. 

            Sometimes (not always) you can negotiate a rate, but not by much.  For example, if I had a lot of money and a bank advertised a rate of 5.15% on a 6 month CD and I walked into a local branch and said "I'll think about it" the bank manager might have the authority to offer 5.41%.  But they can't just say "you're rich so we'll pay you 8% on your money."  I've read posts on LP that indicate people with a lot of money get much higher rates at the bank and I disagree.  They have to follow strict guidelines to be licensed and FDIC insured. However, they can be competitive with other lending institutions. Also, they certainly can't give an investor more than they are charging the people who borrow the same money, right?  Otherwise they'd be operating at a loss.

            Right now real estate is a very good investment.  There are a lot of foreclosures and short sales.  Personally, I would not want to be a landlord, but you can always hire someone to manage your properties.  Some areas are still in a big slump, but the current prices here are lower than they were 2 or 3 years ago.  Someone who is losing his home needs money, so when an investor approaches him with an offer, he often can get a good price as long as the bank approves it.  Estate auctions are sometimes good best places to find homes, but you need to do your homework, make sure the title is clear and hire an good inspector.  I want to mention that the thought of taking advantage of another's misfortune would bother me a lot, but I am only talking about this from a business standpoint.  If I were very wealthy, maybe I could help the family stay in the home.

            In the past I would have recommended U.S. savings bonds, but I think the rates are very low now.  I have some I-bonds that are earning over 5.7% but I bought them several years ago.  However, they are very safe investments and grow tax deferred for 30 years.  You are limited each year on the amount of bonds you can purchase.  I hate to say I even have a couple of bonds on this board. I'll start to get PMs because people think I'm rich, which is really stupid.  (yes that's happened) You can buy a bond for $50 bucks! The site to get info on government bonds is TreasuryDirect.gov

            Annuities are pretty safe investments. Right now you can get as much as 5.3% guaranteed for 10 years and there are "bump up" annuities too. When you invest in something that is tax deferred your money will grow faster than in a bank CD. You only pay tax when you withdraw the money.  The money is not insured by FDIC, but if the trillion dollar companies like AIG go under, I doubt if the banks will be worth anything.  Remember that during the Great Depression, the people who stayed solvent were people who had investments that were not in banks.  Although we now have the FDIC, the way I look at it is this - FEMA was also a government agency that promised to help rescue people who couldn't keep their heads above water in a disaster.  Still, it's a good idea to be diversified, so having money in several banks is a good idea too.  By the way, most banks have financial counselors who offer a variety of products.

            One thing to keep in mind is that almost every financial planner works on commision, although some charge a fee for services. Still, every investment pays a commission to the selling agent. So we all need to be self-empowered and make sure whatever we invest in is the right product to suit our individual needs, not the one that will make someone the highest paycheck.  In addition to several bank CDs, real estate, bonds and other investments, I would recommend buying some fixed annuities with companies that have been in business for over 100 years and have  A++ ratings, meaning very high & stable financial strength.  I wouldn't rely on one source either.  A.M. Best, Moody's, Duff & Phelps, Fitch, Weiss. Standard & Poor gives ratings too.

            I always say that most financial counselors I've dated are Standard and Poor. LOL

              justxploring's avatar - villiarna
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              Posted: December 11, 2007, 7:04 pm - IP Logged

              OMG!  I had no idea I typed so much - sorry.  It didn't look as long on notepad.

              By the way, I'm writing this in advance, since I know time*treat is going to comment that I typed some info he/she already mentioned.  That's only a coincidence.  I was on the phone for 30 minutes. You've mentioned this before on several threads as if I am copying your posts.  I composed this offline and then pasted it.  Many times I see comments or suggestions I've made but I never say anything to the other member. 

              I'd edit my post because of it's length, but I think it contains some good suggestions, so I'll leave it. 


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                Posted: December 11, 2007, 7:18 pm - IP Logged

                My God Justxploring...you seem to have vast knowledge in just about every subject that comes along. I'm impressed.Type

                What's your take on Quantum physics, and it's application on dualism and sub-atomic particle degeneration propensity equations proposed by Shroedenger's cat theory ? Big Grin

                All kidding aside, you're on the ball.

                  Coin Toss's avatar - shape barbed.jpg
                  Zeta Reticuli Star System
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                  Posted: December 11, 2007, 7:33 pm - IP Logged

                  Believe it or not, banks have a celiing on "cold hard cash" and don't want to have over a certain amount 'on hand', especially by one depositor. 

                  After that amount, things change and they have  people from outside the bank crawling aroubnd all the time.

                  We have an ass't professor of marketing here at a community college who put together a bank promotion involving collector rifles. 

                  The bank he was working with actually asked him not to do it again because of these rules.

                  There's a story about the promotion in the intro or chapter one of the book "Murder in Little Egypt".

                  __________________________________

                   On one of the lotto jackpot winner documentaries, one of them said they were getting $25,000 interest, I think it was a month, and i think it was David Lee Edwards!

                  Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                  Lep

                  There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                    psykomo's avatar - animal shark.jpg

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                    Posted: December 11, 2007, 9:38 pm - IP Logged

                    OK...we all know that we earn interest on our money in the bank, which usually isn't much. My question is, lets say tonight, I win the mega millions jackpot and I decide it would be easier to just put it in the bank. On average, how much would I make a year in interest with the lump sum of close to 50 million? How would it be different if the money was invested?

                    Thank you >>>>>>>MissNYC:

                    Would U please allow a PSYKO to put your ??????????????????????

                    Under Advisement............it is complicated!!!!!!!!!

                    Please answer a few question's........>>>>>>>>>>>>>PLEASE!!!!!

                    (1) what are you'r investment risk

                         (do you like high or low RISK?)

                    (2) do you recieve a goverment check of any kind?

                         (note: you will loss  it if they know you WIN a LOTTERY!)

                    (3) are yoy  able to make finenatcinal......>>>>decision's??????

                    THAnk's for your co-operation in your QUEST of RICH'ssssssss

                    IF anyone answer's YES to all above QUESTION'sssssssssssss

                    play>>>JACKPOT$

                    LOL>>>$$$$$$$$$
                     

                      BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
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                      Posted: December 11, 2007, 10:14 pm - IP Logged

                      I watched a show with Larry King live (I believe) when he had interviewed Mr. Richard Branson. Now near the end of the interview, Larry stated that Mr. Branson is worth 1 billion dollars and by the time this interview has ended he will have made around $750,000.00 in interest on that 1 billion dollars! Now that just blew me away that 1 billion dollars earns $750K an hour in interest! I am only going by what Mr. Larry King stated and I might add Mr. Branson confirmed exactly what Larry stated about the sum he is earning in interest by the end of his interview! Oh and Mr. Branson did say with a huge smile on his face, give or take 20 to 40 thousand dollars Larry! End of show!

                      I have also seen a show about Ozzy and what he is worth! It was stated he has around or about 100 million dollars in cash and Ozzy earns around 12 thousand dollars a day in interest on his cash holdings! I also know that Ozzy wouldn't have just cash holdings, of course he has real estate and other interest to say the least. But, I also remember they stated that most of his holdings are in the UK and not in the US! 

                      Keep dreaming the impossible dream, it just may come true! Thumbs Up

                        justxploring's avatar - villiarna
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                        Posted: December 12, 2007, 3:23 am - IP Logged

                        I don't know a thing about quantum physics, Pac.  I know you are joking, but you really don't have to be a math genius if you work at a bank or handle financial products for people.  You just need to be a good listener and know the products, rates and the laws & be very careful & conscientious. 

                        I'm also not a know-it-all but I've studied everything I listed above at length and I've had a couple of jobs in the financial world.  I like to share information, that's all. 

                        I thought my standand & poor line was pretty funny.  I feel like one of those comedians who stand in front of an audience, tell a joke, and it's dead silent. 

                         Eek 

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                          Posted: December 12, 2007, 3:35 am - IP Logged

                          I watched a show with Larry King live (I believe) when he had interviewed Mr. Richard Branson. Now near the end of the interview, Larry stated that Mr. Branson is worth 1 billion dollars and by the time this interview has ended he will have made around $750,000.00 in interest on that 1 billion dollars! Now that just blew me away that 1 billion dollars earns $750K an hour in interest! I am only going by what Mr. Larry King stated and I might add Mr. Branson confirmed exactly what Larry stated about the sum he is earning in interest by the end of his interview! Oh and Mr. Branson did say with a huge smile on his face, give or take 20 to 40 thousand dollars Larry! End of show!

                          I have also seen a show about Ozzy and what he is worth! It was stated he has around or about 100 million dollars in cash and Ozzy earns around 12 thousand dollars a day in interest on his cash holdings! I also know that Ozzy wouldn't have just cash holdings, of course he has real estate and other interest to say the least. But, I also remember they stated that most of his holdings are in the UK and not in the US! 

                          If Richard Branson is making that much in interest he should forget his current businesses and get into money management so that I can retire filthy rich in a couple of years.

                          There are 8,760 hours in a year, so a billion dollars invested for an hour would be the same as 1,000,000,000/8,760 invested for a year. 1,000,000,000/8,544 is $114,155.25.  To earn 750,000 an hour in interest he'd have to be getting about a 757% return. The 750,000 an hour would be $18 million every day, and 6.57 billion in a year. That's on top of the 1 billion he started with, and assuming no compounding of interest.  $7,500 an hour would require 7.57%, which is far more reasonable.

                            TexasDreams's avatar - Trek ROMSYM2.gif
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                            Posted: December 12, 2007, 8:35 am - IP Logged

                            I think it depends on the degree of risk, before my divorce I had a basic conservative portfolio of investments, split between stocks and bonds. Since my divorce to recoup the loss of assets I have a very risky portfolio, all stocks. When I win, I think putting the money in a brokerage house where I could buy FDIC insured CD's from someone like Fidelity or BOA Investment Securities, so as to spread the money around. Also, since a member made a good comment comparing FDIC to FEMA, I would might want to consider Muni Bonds, most are tax free (federal) unless they put you in the AMT category. Anyway, I would love come Friday to have this as my only problem in life!!!!!

                            A few years ago, billionaire Warren Buffett advised  "Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."

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                              Posted: December 12, 2007, 10:12 am - IP Logged

                              I don't know a thing about quantum physics, Pac.  I know you are joking, but you really don't have to be a math genius if you work at a bank or handle financial products for people.  You just need to be a good listener and know the products, rates and the laws & be very careful & conscientious. 

                              I'm also not a know-it-all but I've studied everything I listed above at length and I've had a couple of jobs in the financial world.  I like to share information, that's all. 

                              I thought my standand & poor line was pretty funny.  I feel like one of those comedians who stand in front of an audience, tell a joke, and it's dead silent. 

                               Eek 

                              Your first post was really good stuff.  It ventured into the complex world of investing that anyone with a lot of cash should deal with.  Reminds me some of college accounting and finance class.

                              People probably have short sightedness when thinking about lottery winnings and assume many things about money which aren't true.  So, they have to get up to speed.  And soon.

                              I look at David Edwards and see someone who, through poor decisions, blew all of his dough.  That's fine, but I'm sure it wasn't his intention to do that.  He ignored good financial advice and ran through the money.  I'm sure his personal demons, such as the big drug habit, didn't help him make clear headed financial decisions.  And, I'm confident, he would have fould little time for your analysis.

                              Finally, I think the hard part of handling your money is knowing where it all is, so you have to pay attention to outside influences.  The current housing slump is a good example.  Not to mention dollar valuation and how decisions in China, for instance, effect it.  A lot to think about, almost a full time job.  Better get a Blueberry or WiFi to keep up.

                              Good stuff and thanks for posting it.  The site can use such input.