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.
70% of lottery winners go bankrupt within 5 years?
Whoa, I never heard that one before.
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.
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.
This is a great lesson for the "kid". He'll be rich(er) in life.
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.
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.
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.
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.
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..
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.
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.
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
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.
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.
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.:)
props to him for buying a Malibu!
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.
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
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
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.
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.
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.
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.
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!!
Did you know that 70% of statistics are made up on the spot??
Notice how no source was quoted on that statistic???
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.
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.)
Isn't this the kid who was on one of those Lottery curse TV shows or something?...If its him, it showed him at the stock exchange wearing a high priced suit. When I seen him on TV, I said to myself that this kid is doomed. No real basis behind it, just a feeling. Hope i'm wrong though. Seems like a good kid...
why are there no dates in this article?
he won back in July - 07 i think.
DIFFERENT STROKES FOR DIFFERENT FOLKS!
A lottery winner deciding between choosing a Lump Sum vs Annuity like investing in stocks, bonds or planning retirement plans, is not one size fits all. Some people may be better with an annuity. Maybe they have not been successful with money matters in their past or are reluctant about having to plan large sum of money at one time, etc.
Lump sum may be preferable for those interested investing over the long term or living off the interest and re-investing part of interest. A Good Financial Advisor assesses the clients risk leve, what they want the money to do for them, etcl then recommends strategies for savings, investments, spending plans, etc.
ONE SIZE DOES NOT FIT ALL!
My personal choice for a lottery win would be Lump Sum payment. live off of 1/2 or 1/3 of the interest and re-invest the other portion of interest. Money invested doubles every seven years. I'd risk Investing rather than annuity payments.
This kid was on TLC's Lottery Changed My Life. He was going on and on like he'd won 100 million. I have a feeling he'll be broke by the time he's 25.
The stat about 70% of winners ending up broke can't be right.
interest on savings in USA 3.8% then there is the whole will my bank fail? when can i get my money ?
$330k sure isnt retire early, not a care in the world amount. at 3.8% thats $12.5k a year. dunno how thats taxed, but anyone here think of retiring on $12k a year? hes still got 330k and a degree, just dont tell your prospectivbe employers you won the lotto.
good luck kid
Judging by my weakness for giving in to family members that need to "borrow" money when I don't have it to loan out in the first place, I would take the annuity option. It's safter for me because then I can say sorry, I only get a check once a year and I've got to live off of it...no lump sum in my bank account to give you money.
Plus, judging by my fiances at the moment and in the past....I'm playing it safe....money just goes too darn fast for me and I'd be severly depressed 5 years down the road looking back at how I blew 1 million or more in a short amount of time because I had it all handed to me at once. So for my sanity...I'm taking the annuity option.
The problem is the stock market is a scam to take money away from retail investors, the average investor doesn't understand what goes on, and investing in individual stocks today is just like going to Vegas, it's a gamble, not an investment. This lottery winner may have purchased good quality stocks, but lost money anyway to short sellers.
Did you know that your broker lends your stocks out, without your knowledge, and then it is sold by the borrower, and then the borrower has to give it back to the broker in a certain amount of time, buying it back at the lowest price possible to return it and make money? The individual stock owner wants his stock to go up, while the person (short seller) who borrowed it wants it to go as low as possible, and many things happen behind the scenes to force your stock price lower so the short sellers make money, then you panic and sell your stock when you see how low it went, and the short seller gets rich because he wiped out your stock value! The worst thing that was ever put into place was 401K's, the short sellers robbed the middle class of their savings. Barney Frank (Rep. Mass.) promised to regulate short selling after the market downfall, but nothing has been done so far.
If you are an average retail investor, keep your money out of individual stocks until short selling restrictions are put in place by our government. Short selling in not illegal, but immoral. With all this talk about Ponzi schemes, short selling is an outrageous scheme to con the average investor out of hard earned dollars and it should be outlawed, IMO.
Example of short selling: Borrowed shares from broker/indivdual stock owner of XYZ company are sold for - $100.00
Stock price falls, borrower (short seller) buys it back to return it to broker - - 25.00
Borrower makes profit- 75.00
-
With stocks, for every buyer there is a seller (and a commission collected from each).
When Trader Adam makes that "historical average of 10%", it is because Trader Bob has lost that amount; and each pays a commission when they buy and again when they sell, whether or not the trade is a 'win' or 'loss' to the individual.
CEOs on TOUT-TV saying they think their company's stock could go up another 30% ... meanwhile they're selling.
(Sure they might go to jail, later, but the folks who lost money don't get it back)
Commentators promising that things are "fine" at a company that goes bust within a week.
Going to the casino can be fun and profitable; just know that it's a casino and the money to pay the winners (and the house) comes from the losers.
My daughter is a graduate of Towson University. Believe me, it would have been nice if she could have had that scratch off win while she attended Towson. Although, I doubt that she would have a cent left now. (she is the ultimate shopaholic)
At the time he invested, his mind was moving in the right direction. Trying to invest on his own, without professional help, while attending college is a big gamble. Too many things to concentrate on at once.
His best bet would have been to put it all awayin a safe place such as a bank, drawing interest until he finished school.
Everybody wants to make a killing in the stock market.Remember slow and steady wins the race.When i win the lottery i'll put my money in index funds and conservative dividends stocks.
Wow, he lost alot of weight as well. Lottery winners should be like this guy. Unfortunately, many lottery players are low-income and received poor eduation so they blow it all away after they win.
"One cant lose that which they do not place up for risk"
I guess you've never heard of inflation. Assuming you didn't lose money to a fire or theft, over the past 20 year you still would have lost about 3% every year. That means that every dollar you "safely" saved by not investing 20 years ago would be worth about 55% of what it was when you stuck it in your mattress, and you'd have about a zero chance that it would ever recover. For those who think that "investing" their money in a bank is safer, consider that in many years inflation was as high as the bank's interest rate. Then after that lets your money just break even for the year, taxes reduced the "earnings" so that you had a net loss in purchasing power.
"He started his investments when the stock market was doing good then when it went belly up he should have pulled his money out"
It must be nice to always be able to buy low, sell high, get out at the beginning of a downturn and get back in at the beginning of the upswings. In reality, you can't lose a dime unless you sell, or the stock truly becomes absolutely worthless. The market always goes up and down, but over the long haul it goes up. Selling early in a downturn and buying back early in an upturn is a great theory, but in practice it seldom works. In some cases, including this one, things tank so fast that a lot of the damage is done by the time you can make a rational decison.
"Can anyone tell me why they would put their money in the stock market, EVER? "
Sure. Warren Buffett can tell you.
"It is STUPID to invest in ANYTHING, market or otherwise that can turn down on a whim."
What's stupid is investing in something because you think it's foolproof. Anything can lose value.
"Another shocker is that the "financial advisor" quoted in the articlesaid you'd do better to take the annuity then to take the lump sum -I've never heard that before."
That's not what he said. He said that most winners lose the money if they don't take the annuity. Of course many winners have sold the annuity on their way back to the poorhouse.
"No difference in betting on the Colts or Jets this week. In fact atleast with betting, I am always aware of my risk/return, not so withthe market.."
With any investment you always know that the worst possible outcome is exactly the same as betting: you might lose all of your money. Unlike betting, though, the chances of that hapening are far less than the roughly 50% chance with sports. Another difference is that the potential upside is huge, vs the doubling of your money that would be typical by betting on sports.
"When Trader Adam makes that "historical average of 10%", it is because Trader Bob has lost that amount"
That would be true only if the long term average value of a stock never changed. In reality, somebody making a profit on a stock simply means that the seller didn't make that same profit on that same stock. If a stock was worth $50 when it was first issued and is worth $100 the people who invested in it have an average net gain of 100%.
It sounds like this kid is in it for the long haul, and he's getting a good education. Odds are he's going to do just fine.
Although I realize everyone is different I think his first mistake was to start giving some of the money away.
In the article he states putting the bulk of his money in the stock market which was his second mistake. Anyone who knows anything about the stock market knows it's a risk. If he had done his homework he would have put the biggest chunk in safer investments and/or hired his financial team to start with.
All in all I think he's still doing pretty good! Face it most 19 year olds would have blown most if not all of it before they realized it was gone. He still has a nice chunk to work with and hopefully can look forward to an early retirement in life.
The problem I have is the average investor doesn't understand what short selling is and what the actual risks in the market really are. If I bet on the JETS and know the spread, I know what has to happen in order for me to win money, unless the game is fixed. Some people think the stock market is fixed and the odds are against the retail investor to make money, so we have three things in the market to cause an investor to lose money on individual stocks; company fundamentals going downhill, short selling, market manipulations. I would suspect that most investors, like our young lottery winner here, know nothing about short selling, market manipulations, and are buying stocks based solely on company fundamentals.
The poster who made the comment regarding buying dividend paying individual stocks can purchase dividend paying mutual funds for an added element of safety, but not an Exchange Traded Fund which is traded like a stock during the day and can be short sold. I purchased two open-ended mutual funds when the market tanked in 2009, and I have done very well, they yielded over 30% for me in capital gains and monthly dividend checks in 2009, and I'm safe from the short sellers because the funds are priced at the end of the day, after the market close. Even if some of the stocks in the fund were short sold during the day and their price per share went down, the loss to the fund wouldn't be so devastating like it would be to an individual stock because of the diversity of the fund. The funds I purchased are tax-advantaged also, so I'm getting to keep more money from these investments from the tax man.
Don't forget, an added risk to any individual stock investment are the Exchange Traded Short Funds (2X and 3X bear), they will erode the value of individual stocks very fast, I would never own an individual stock again with the advent of these funds, and there are many more of these short funds coming to the market in the near future.
Warren Buffet may have made tons of money in the market, but don't forget, he was probably hedged against losses, the average investor usually isn't a sophisticated enough investor, or have enough money to pay for hedging strategies like short selling.
LETS GO JETS!!!!!!!!!!
One more danger in the market is black box trading, trades done automatically by computer programs with no human intervention, even the fund managers are well aware of this danger to the stocks in their funds. Did anyone read the article about the Goldman Sachs super computer? It sees what trades are being made a few seconds before they go through, and trades accordingly. What can the average investor do about that? Individual stock buying today carries too many risks, if you make money you are lucky, just like in the casino.
If I ever win, I will do my own investing. I will certainly diversify my investments. As for the Stock Market, I would start out small with on-line trading. If my research and strategy works I would continue. I have had a long time to think about what I would do and would welcome the chance to try some investing.
I would not buy an American car because of the way GM and Chrysler screwed their investors and took care of the unions!
I hope the young man does well!
Come on Powerball !
dpoly1: Do yourself a favor and learn from my mistakes, I traded stock, mutual funds, options, etc. for years and without some of the pitfalls today's market has, I had some successes, but the financial losses were greater. A talented trader who showed me the ropes eventually lost every penny he ever made and started asking me if he could borrow cash so he could continue trading and make back his money ( I changed my phone number), very few traders are successful. Invest in dividend payers, use the monthly checks to spend some and reinvest, and let it grow slowly, you will make much more money that way. Don't forget, trading on-line means paying brokerage commissions, short term capital gains taxes, etc. I wish I knew several years ago what I know today.
My neighbor lost $20,000 in 2009, because his broker day traded his account and put him in 3X bull (Long) and (short) bear funds, now my neighbor is looking to sue the broker. I warned my neighbor not to let his broker do it, but he didn't listen to me.
LETS GO JETS!!!!!!
am going to be the jerk here, and say he didn't invests the money fairly wisely
"investing" in the stock market for Capital Gains is flat out gambling,"then again he got lucky once, so why not try it again LOL"
now if you invested into companys THAT PAY a high dividend yield, that have little debt, lots of cash on hand, , and are their just to get money back to their owners"share holders" NOW THATS investing,
take a stock that is risky on capital gains, WWE,
its track record is up and down, however has a high dividend around 10% must of the past years
in 2008, it hit a high point of 18 bucks per share
inless then a year form that high,
it hit a low point of 10 bucks per share,OH
However,its dividend sure was high AT ITS LOWEST point, if you was their for real "investment" owning a part of the companys profits
hell when it hit LOWS it was a even BETTER DEAL to buy , my parents made a killing buying Low price stocks with high dividends ,
now wwe stock back up to 15 buck range, sure not recovered to its high in 2008, but who cares, its making a killing for its investers
so even if the price goes up and down, if your sure getting a nice income form it in dividend checks, THATS wise invement
remb, "good investments" are solid returns in the form of dividend checks
, if the company has little debt, lots of cash on hand, has a high dividend , Now thats a wise investment
, people who play the stock market for Capital Gains alone are fools,and deserve to lose in the long run
onless you got insider trading info, then go at it, its like card counting, now the odds are on their side LOL
hell when people like in the above storie was in disappear at stock market crashing and burning to record lows
my family was making a killing on buying under priced, Great high dividend stocks
hell i wish the stock market would crash and burn to record lows more often!,
NO BAILOUTS, we want free market where i live LMAO CEASE it makes smart people even richer
I feel bad for this kid , he thought he was doing right. he's a little wiser now and i think he'll go far.
You know, I have to say, it's easy for Warren Buffet to say invest your savings when he has $50 billion dollars, and he can lose $20 billion and not bat and eye, he doesn't have to worry about having gas money for the week or worry that he has all of his money in the stock market. My point is, I'm not investing my money in the market for others to play with, their big thing isn't to make YOU money, it's to make THEMSELVES money and even if the price of the dollar falls, at least you know that you have your currency in your safe at home. I may not make money by investing, but when the market crashes again, and it WILL, and people lose everything, at least I will have my savings at home, it definitely makes me feel better. People win the lottery, then invest it in the stock market-to grow more money-doesn't make sense to me.
It's a number that has been around for awhile...What they don't tell you is what makes up that number. Could be a very high % of small winners....what do you think the definition of "lottery winner" is?
I always thought or assumed it was regarding jackpot winners, though I suppose it could be any "winner". I cant remember ever hearing or reading 70%, that seems a little high.
fja, my definition of lottery winner is one who wins more than he or she spent. If I spend $1000 in one year on the lottery, and I "win" $500, I lost, if I "win" $1000, it's a wash, if I "win" $1001 or more, who hoo!!! I won! LOL. That hasn't happened.
Investing with Buffett just got easier. The 'baby' Berkshire shares just did a 50-1 split.
Stocks, bonds, res. & comm. real estate, metals, farmland all get their day in the sun. Just not every day.
That saying is simply "moralist" propoganda. It is an invented statistic. Like the common but nonsense statment that we only use 10% of of brains, or only poor an uneducated people play the lottery, etc. Over 70% of Americans have played the lottery. It makes no sense that over 70% of Americans have gone bankrupt (nearly everyone is a winner of some amount at some time).
The annuity option is the best choice for MOST people. Imagine that someone gives you $100 million in cash. You have two offers. One is to invest $100 million and have a 100% guaranteed return payout over a period of years (generally long-term). In Powerball it is even a graduated annual payment, going up by 4% a year to match inflation.
Or you can take the $100 million and pay about 45% of it in taxes. So you then take the remaining $65 imllion and invest it in something, taking some risk that you will lost it all. You can control your risk somewhat, of course, generally by accepting a lower rate of return.
In case you missed the big secret. There is a BIG difference in the earnings you can make investing $100 million versus investing $65 million. The lottery can invest the cash jackpot amount before taxes. That's why U.S. lotteries offer the annuity - THEY CAN INVEST IT BEFORE TAXES. It is rare that a "finanicail advisor" recommends taking the annuity. There are a lot of fees to be racked up by them investing that money.
Life is gambling. The stock market is gambling for the big boys. Have no doubt, the advantage in the stock market is that it takes longer. It takes longer both to lose it and to get rich. There is no such thing as making "smart investments". Darts do just as well (better, in fact, in studies) than "experts". It takes years to move the money out of your pocket over to the big boys' pockets. In good times, they take their share, leaving you with a little more return than you pay out for your mortgage; not as much as you pay to your credit card. In bad times; they take it all, but they always get their take.
Most folks don't think of the stock market as gambling. Odd that I can lose six figures in the stock market (along with most of America) and no one suggests counselling. Lose a tenth that much at the craps table and counseling would be mandatory.
Oh, and Coca-Cola can go away. Perhaps from the future lawsuits for fructose harm (obesity); perhaps something else. Then the stocks are worth the same as last week's lottery ticket.
Enjoy playing both games. Just don't fool yourself about what you are doing.
I would have put the majority of the money into real estate and would have stayed far away from the stock market.
I was in Houston, Texas during the oil bust....so many houses and real estate in foreclosure....it was like it is now. If I had had the money during the oil bust to buy cheap real estate in Houston, Texas....I'd be sitting pretty right now because property values did increase but it took a few years.
If I won the lottery, the majority of it will go into real estate. The stock market is too shaky right now to invest into, so I would not invest in the stock market at all.
First, he should sit tight and wait for the market to rebound.
Second, he should stop talking to the media about his finances, it is a private matter; unless he is paid for the interview.
Smart kid, Bad idea off investing large sum of money in the market, its too risky now days.
He's young enough to regain his losses.
i got my numbers wrong 3.25% was a busines sloan, interest on savings is only 1.25%!!!
330k at 1,25% = $4k a year!!!!
on 1 mill 12.5k a year!!!
The best part is this seems just like a repeat of the story about him over a year ago, which is conveniently linked over on the right side with the related stories.
https://www.lotterypost.com/news/183368
There are just as many things to take into consideration with taking the annuity as there are with taking a lump sum.
Hmmm, smart enough to invest but not smart enough to do dollar cost averaging and benefit from the down turn. If you invest it all at one time then you limit what you can do. Still $330,000 should give him a decent head start and the recession won't last forever, he'll get it back.
He should park it for the long term and aim for just 10% (safety) compounded interest. If he can get this, he will have his 1 million back by the time he is 34 or 35. The rule of 7.