Welcome Guest
Log In | Register )
You last visited January 17, 2017, 12:05 pm
All times shown are
Eastern Time (GMT-5:00)

Lump Sum or payments?

Topic closed. 67 replies. Last post 9 years ago by mylollipop.

Page 3 of 5
PrintE-mailLink

United States
Member #17555
June 22, 2005
5582 Posts
Offline
Posted: February 11, 2008, 1:43 pm - IP Logged

A nifty search button. Really! Oogle

 

I know there is a search button. Re-read my post. I said: "There are new people who may want to discuss topics, but can't because they are closed." So by your post above, they can search for the topic which is true, but what if it is closed? Can they not start a new one to discuss it? The search feature has nothing do with a topic that has been closed. Understand what I am getting at? I am sure that you have created a topic or two that has been done in the past and so have many other people.

       

JMO. 

Anybody here can do whatever their heart pleases. I really couldn't care less.

I was only stating my opinion. Am I allowed to do that? Or is there a new restriction law about replies to a thread I wasn't aware of?

    ThatScaryChick's avatar - x1MqPuM
    Idaho
    United States
    Member #56506
    November 21, 2007
    6537 Posts
    Offline
    Posted: February 11, 2008, 1:52 pm - IP Logged

    Anybody here can do whatever their heart pleases. I really couldn't care less.

    I was only stating my opinion. Am I allowed to do that? Or is there a new restriction law about replies to a thread I wasn't aware of?

    I guess I can say the same thing. Aren't I allowed to state my opinion on the subject or do I have to shut up? Like you I was just stating my opinion.

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


      United States
      Member #17555
      June 22, 2005
      5582 Posts
      Offline
      Posted: February 11, 2008, 1:56 pm - IP Logged

      I guess I can say the same thing. Aren't I allowed to state my opinion on the subject or do I have to shut up? Like you I was just stating my opinion.

      No you don't have to shut up. I have about 5 more hours before I have to go to work. Be my guest.

        Avatar
        NY
        United States
        Member #23835
        October 16, 2005
        3502 Posts
        Offline
        Posted: February 11, 2008, 4:50 pm - IP Logged

        Justxploring

         

        I'm figuring that anyone who won a jackpot would pay cash for a house - instead of taking on amortgage and paying for it three times over - you know, the "heat, eat, and taxes" approach - the house (and everything else) is paid for and the only bills are groceries, utilities, and property taxes.

         

        So, if someone had won a lotto years ago, and was getting annual payments in the $200,000 to $300,000 range, and was going to pay cash for a house, there goes that year's annuity check, no?

        Have you ever considered what it costs to pay cash and lose the investment income? If you invested 250k at 5% and lost 30% of the interest to taxes you'd net 3.5% every year.  In 30 years that would turn the 250k into  just over 700k, for an increase of $500k.  If you took a 30 year mortgage on 250k at 6% your monthly payments would be just under $1500, so the total of the payments would be $540,000.  $290,000 of that would be interest that's deductible, saving you $87k in taxes. That makes the real cost of the mortgage $453k.

          Avatar
          NY
          United States
          Member #23835
          October 16, 2005
          3502 Posts
          Offline
          Posted: February 11, 2008, 4:54 pm - IP Logged

          Exactly. David Edwards just blew it on crap. I would not even buy more than three cars TOPS, probably only two. I don't need a lot to be happy, just the security to know that I will not be without money ever again. All I would have to do is invest in a 60 month CD at 5.5%, and I would be sitting pretty for a long time, then renew as needed. Now annuity payments on say $200 million might be worth it if I had no choice, but still would never compare to the interest rates of the lump sum.

          About the only advantage I can see with an annuity, and a really high paying annuity that is, is if you do not have anyone or want anyone to claim your fortune in the end. Or if you do not want that much money, and you just want to spend the principal for what you need. You can make mistakes, but a you would still have to wait a year or so for you next check, which may make things worse if you needed public assistance. So irresponsibility could actually hurt you a lot more with an annuity.

          "annuity payments on say $200 million might be worth it if I had no choice, but still would never compare to the interest rates of the lump sum."

          Have you ever actually compared them? The fixed payment for MM is 3.33% of the  annuity value every year for 29 years. For an annuity of $100 million that's $3,333,333.33 every year.  If you choose the lump sum the pre-tax payment will be about $62 million. If there's no state tax after the IRS gets their share you'll have about $40.3 million. Take $3,333,333.33 for your first year, and you'll have a bit under $37 million to invest.  To earn $3,333,333.33  you'll need to earn about 9% interest.  With a state tax you'd probably need better than 10%. That can be done, but there are no guarantees, and your principal is at risk. The annuity payments, OTOH, are guaranteed.

          What's really important isn't how much interest you can earn, but how much of the income you'd actually spend. If you spend all of your income, when the annuity payments stop you'll have no income and nothing left, other than whatever you've bought. If you invested the proceeds from the lump sum, OTOH, your principal can earn income forever. That's the real advantage of the lump sum, especially for people who are relatively young. You should expect a smaller income from the lump sum, but as long as you leave the principal untouched you can spend the annual income. Of course if you're  planning on living for very long you should reinvest some of the income so that your income will increase.

            justxploring's avatar - villiarna
            Wandering Aimlessly
            United States
            Member #25360
            November 5, 2005
            4461 Posts
            Offline
            Posted: February 11, 2008, 5:23 pm - IP Logged

            Coin Toss was talking about a 20 year payout.  I believe that's 5% interest.   ex:  $2,000,000 would be $100,000 a year for 20 years, although I did mention 30 years in one of my comments.

            I was only pointing out that, depending on one's age, making up the 50% loss will take a lot of time.  In FL where payouts often exceed 60% it's a little different. 

            Everyone keeps talking about being responsible and investing wisely.  Millions of "experts" lost a fortune in market crashes.  Many people trusted companies like Enron.  Many people bought homes in 2005 and said to me "there's no way this housing boom is ever going to slow down." 

              jarasan's avatar - new patrick.gif
              Harbinger
              D.C./MD.
              United States
              Member #44103
              July 30, 2006
              5587 Posts
              Offline
              Posted: February 11, 2008, 5:25 pm - IP Logged

              One of my favorite TV character names was Lumpy on Leave it to Beaver.  Eddie Haskell was on some talk show last week, the Beaver rules.

              Go to fullsize imageAw Wally!

               Oh Yeah, don't count yer chikins till they is hatched. Interest shimterest, win  da jackpot first.

                OldSchoolPa's avatar - Lottery-057.jpg
                Gurnee, Illinois
                United States
                Member #49731
                February 12, 2007
                919 Posts
                Offline
                Posted: February 12, 2008, 11:58 am - IP Logged

                Coin Toss was talking about a 20 year payout.  I believe that's 5% interest.   ex:  $2,000,000 would be $100,000 a year for 20 years, although I did mention 30 years in one of my comments.

                I was only pointing out that, depending on one's age, making up the 50% loss will take a lot of time.  In FL where payouts often exceed 60% it's a little different. 

                Everyone keeps talking about being responsible and investing wisely.  Millions of "experts" lost a fortune in market crashes.  Many people trusted companies like Enron.  Many people bought homes in 2005 and said to me "there's no way this housing boom is ever going to slow down." 

                I agree with MissNYC in that those who wouldn't want to change anything should just not play the lottery at all.  For goodness sake, even just having one such person or even a congressman win is too much!  I have also noticed that people hate to see convicted criminals win jackpot lotteries, but I think congressman are in the same league. 

                As for justxploring, it is apparent that you would be a weak link on any debate team.  This is not a personal attack as I am just rebutting what you wrote (heck I don't even know you so you can't take it personal). As for the advice to be responsible and invest wisely, no one ever said that "experts" never lost money in stock market crashes...come on, EVERYONE loses money in stock market crashes.  Yes people trusted companies like Enron, but what happened at Enron was criminal behavior and those responsible are paying the price with restitution and prison sentences.  And I hope you didn't listen to those who told you that the housing boom would never slow down...the housing market is no different from the stock market and we all know that the stock market goes through cycles, which is normal.  You have times of boom, followed by periods of slowdown, followed by recession, followed periods of recovery.  And it is possible to still make money STAYING invested the entire cycle.  But that is beside the point.  All I am saying is don't just make a statement to just make a statement. 

                Get MONEY!!! Winning a JACKPOT lottery is all the HOPE and CHANGE I desire!!!  NOW give me MONEY!US Flag

                The guy who won the presidency in 2008 really won the lottery...he is now millions richer, travels in first class style, and even has a staff that would be the envy of the richest Powerball winner (she has a staff of 2). Every night he goes to sleep, he probably plays the close of Dave Chappelle's Show: I'm rich beyatch!

                  OldSchoolPa's avatar - Lottery-057.jpg
                  Gurnee, Illinois
                  United States
                  Member #49731
                  February 12, 2007
                  919 Posts
                  Offline
                  Posted: February 12, 2008, 12:05 pm - IP Logged

                  I'll definately take the lump sum and try to get all the financial advise I can from various sources to decide where to put it all, because I definately won't put it all in one place. With 100 mil after taxes, off-hand, I'd say it's a good idea to award yourself about 10 million to spend, and invest the rest at first. Hopefully the 10 mil would last, if it doesn't, hopefully you're smart enough to realize how lucky you are that you didn't award yourself the full amount to spend and slow down. Personally, I will like to change my life. I too am in my late 20s, so I'll by a nice home and 1 or 2 condos, and a few nice cars, no Bentley's or anything, but a Mercedes or two. People who win very large lotto jackpots, like 200 mil plus, and get up and say their lives won't change just piss me off...then why play? Isn't the point to live your financial dreams? If your happy with your life financially, perhaps the only change you should make is to stop wasting money on lotto tickets.

                  Now I would put all of my money in one place...invested with me!  Yeah, I too would change my life after winning any type of jackpot...of course, the change would be much bigger with say a $100 million cash value jackpot win than say a $7 million cash jackpot win (yeah, as you can see there would be no annuity option for this kid so I don't even get caught up in the advertised annuitized jackpot prize amount). 

                  But I would definitely purchase a Bentley and a Maserati.  The Bentley would be my going out on the town car.  The Maserati would be my feel the need for speed car.  And I would buy a Volvo XC90 Sport as my business car.  Sorry Mercedes and BMW...I want my show cars to be exclusive and Mercedes and BMW are no longer exclusive.

                  Get MONEY!!! Winning a JACKPOT lottery is all the HOPE and CHANGE I desire!!!  NOW give me MONEY!US Flag

                  The guy who won the presidency in 2008 really won the lottery...he is now millions richer, travels in first class style, and even has a staff that would be the envy of the richest Powerball winner (she has a staff of 2). Every night he goes to sleep, he probably plays the close of Dave Chappelle's Show: I'm rich beyatch!

                    Coin Toss's avatar - shape barbed.jpg
                    Zeta Reticuli Star System
                    United States
                    Member #30470
                    January 17, 2006
                    10389 Posts
                    Offline
                    Posted: February 12, 2008, 12:20 pm - IP Logged

                    Have you ever considered what it costs to pay cash and lose the investment income? If you invested 250k at 5% and lost 30% of the interest to taxes you'd net 3.5% every year.  In 30 years that would turn the 250k into  just over 700k, for an increase of $500k.  If you took a 30 year mortgage on 250k at 6% your monthly payments would be just under $1500, so the total of the payments would be $540,000.  $290,000 of that would be interest that's deductible, saving you $87k in taxes. That makes the real cost of the mortgage $453k.

                    Ky Floyd

                     

                    You're still paying for the house three times.  

                     

                    Total payments of $540,000 on a house you buy for how much?

                    Don't forget there was a time when interest on car payments, loans, and credit cards was deductible, and there have already been attmpts at making mortgage interest non-deductible. 

                    Unlikely to happen, but what if it did? 

                    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.

                      JackpotWanna's avatar - squiz

                      United States
                      Member #4121
                      March 23, 2004
                      817 Posts
                      Offline
                      Posted: February 12, 2008, 1:29 pm - IP Logged

                      Can you have both?

                       

                      For example today's Megamillions Jackpot is $150+ Million.

                      Cash After taxes about $70 Mil

                      I will take $45 Million  to buy a $90 Million annuity ($2 million in 45 different banks ) 

                      I will take  $8 million in cash. ( buy forclosed real estate )

                      I will take  $7 million in cash. ( travel, and help family and friends )

                      I will take the remaining $10 million in cash into short term interest accounts(money market and 3 month cds and saving accounts) 

                      Good luck to everyone who is paying the mega tonight. 

                        Coin Toss's avatar - shape barbed.jpg
                        Zeta Reticuli Star System
                        United States
                        Member #30470
                        January 17, 2006
                        10389 Posts
                        Offline
                        Posted: February 12, 2008, 7:58 pm - IP Logged

                        JackpotWanna

                         "I will take  $8 million in cash. ( buy forclosed real estate )"

                        With that kind of score and that kind of cash, why buy properties and get involved with  repairs, improvements, etc...even if you hire a property management copmpany to do it?

                        Why not REITs (Real Estate Investment Trusts)? I would think the more hands-off investing and the less involvement in the properties, the better.  

                        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.

                          JackpotWanna's avatar - squiz

                          United States
                          Member #4121
                          March 23, 2004
                          817 Posts
                          Offline
                          Posted: February 12, 2008, 9:20 pm - IP Logged

                          JackpotWanna

                           "I will take  $8 million in cash. ( buy forclosed real estate )"

                          With that kind of score and that kind of cash, why buy properties and get involved with  repairs, improvements, etc...even if you hire a property management copmpany to do it?

                          Why not REITs (Real Estate Investment Trusts)? I would think the more hands-off investing and the less involvement in the properties, the better.  

                          My background is in real estate.

                          It will keep me grounded and avoid the foolishness from having too much free time.

                            Coin Toss's avatar - shape barbed.jpg
                            Zeta Reticuli Star System
                            United States
                            Member #30470
                            January 17, 2006
                            10389 Posts
                            Offline
                            Posted: February 13, 2008, 12:47 am - IP Logged

                            To each his own...

                            Personally I think parrt of the lure of hitting a jackpot is to have nothing but free time! 

                            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.

                              four4me's avatar - gate1
                              MD
                              United States
                              Member #1701
                              June 18, 2003
                              8391 Posts
                              Offline
                              Posted: February 13, 2008, 1:27 am - IP Logged

                              Here's a thought if you couldn't handle your finances before you win the lottery what makes a person think they can after they win the lottery.

                              Only so many people are able to accomplish this. The vast majority of people who win big are probably living from paycheck to paycheck.

                              To handle a jackpot win you need some kind of money management education if you intend to handle your own finances.

                              I know lots of people who came into money either through an inheritance or the lottery and a few years later they were right back where they were before the came into money.

                              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.