what happens when interest rates drop to zero?Prev TopicNext Topic

• savagegoose

  

  adelaide sa
  Australia
  Member #37,135
  April 11, 2006
  3,341 Posts
  Offline
  Sep 21, 2019, 11:59 pm

  ▲▼

  just wondering if interest rates drop to negative will the advertised annuity amount become less than the cash amount?
  maybe the will stop advertising  the annuity amount and start making it annual payments to disguise  it

  " Still swinging, still missing "
  2014 = -1016; 2015= -1409; 2016  = -1171; 2017 = -1257 ; 2018 = - 1380 =  TOT =  - 6233

  keno historic = -2291 ; 2015= -603; 2016= -424; 2017 =-427; 2018= -223   TOT = -3968

  :
• DELotteryPlyr

  

  Maryland
  United States
  Member #162,427
  January 2, 2015
  3,211 Posts
  Offline
  Sep 22, 2019, 8:20 pm

  ▲▼
  In response to savagegoose

  Quote: Originally posted by savagegoose on Sep 21, 2019

  just wondering if interest rates drop to negative will the advertised annuity amount become less than the cash amount?
  maybe the will stop advertising  the annuity amount and start making it annual payments to disguise  it

  GOOD QUESTION!!!

  I am REALLY hoping we don't go to  negative interest rates here in the US!
• KY Floyd

  

  NY
  United States
  Member #23,834
  October 16, 2005
  4,777 Posts
  Offline
  Sep 23, 2019, 12:53 am

  ▲▼

  The cash value will always be the cash value, and players with a lick of sense already know that's the value that matters. If interest rates drop to zero then the annuity value will be the same as the cash value. I'm skeptical that it would happen in the real world, but in theory negative rates would result in an annuity value that's less than the cash value, but even when the annuity is 60% more than the cash value almost nobody takes it.

  I'd kind of like to see negative interest rates and an annuity jackpot that's less than the cash value. Not because of the actual values, but just to see what the lotteries would advertise. If the cash value was $100 million and the annuity was $90 million I've got a suspicion that we'd finally see them advertising what a winner can actually get right away instead of a fictitious amount that requires waiting for 29 years.
• gy65

  

  United States
  Member #34,930
  March 9, 2006
  209 Posts
  Offline
  Sep 24, 2019, 3:51 pm

  ▲▼

  Advance to 3:31 . . .