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A must read and Cash didn't write it

Topic closed. 29 replies. Last post 13 years ago by midwstrngirl.

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visiondude's avatar - eye3logo
light on my feet
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Posted: July 15, 2003, 11:58 pm - IP Logged

it STILL "pays" to take the lump.



i have read the going rate is between 1/2% to 2% depending on amount of money involved and the person you picked to handle it. the more the amount, the less the percentage. first of all with that much $$$$ you want to negotiate a flat fee, not a percentage. the flat fee negotiation will end up being less than the 1/2% and the financial advisor will have less of an excuse to manipulate your portfolio.



people will line up to handle that kind of $$$$ so that puts YOU in the drivers seat to negotiate. then over time you teach YOURSELF how to handle/invest effectively cutting out the middle man and taking more control over YOUR money - YOURSELF.



any comments midwstrngirl?



VDQPLS

            "i am .........."meant to"       

P.S.,  that RJoH  is a stand up guy.  thanks,  vision

         until further notice,  it's  france everyday

    megamillionaire's avatar - Sphere animated_small_ neg2.gif
    Queens, NY
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    Posted: July 16, 2003, 9:58 am - IP Logged
    Quote: Originally posted by midwstrngirl on July 15, 2003



    t bills are you mad!!!

    triple tax free deferred bonds!  then you get income without having to pay taxes!





    MWG

    You have a good point but what's the interest rate of the ttfdb's? Can you write checks against the intrest?

    Megamillionaire

    Time is a wonderful teacher, but it kills all its students.

    A man must consider what a rich realm he leaves when he becomes a conformist.

      megamillionaire's avatar - Sphere animated_small_ neg2.gif
      Queens, NY
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      Posted: July 16, 2003, 10:02 am - IP Logged

      VD:

      Beware financia

      Megamillionaire

      Time is a wonderful teacher, but it kills all its students.

      A man must consider what a rich realm he leaves when he becomes a conformist.

        midwstrngirl's avatar - hair

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        Posted: July 16, 2003, 4:16 pm - IP Logged

        triple tax free deferred bonds fall in the category of fixed income investments, they are generally issued by state gvts and or municipalities, you are basically loaning the government money

        i am not sure if the interest is paid quarterly or yearly, i guess it depends on the bond

        bond yields vary, but the reason high net worth individuals have them in their portfolio are to reduce their tax liability and provide income...for example, a bond yielding 4% may not seem like much (well maybe now it is considering interest rates are so low) but the value is more in the fact that the yield is 4% TAX FREE

        portfolio managers are generally paid a fee of around 1%, which is agreed to before hand, and Vision Dude is right, people with a lot of money are certainly in a position of strength when it comes to negotiating terms

        i certainly am not qualified to manage a jackpot winners portfolio VisionDude, though i am flattered that you think so

        i think the benefit of this board, is that we all learn stuff from eachother about finances that will be helpful when we win, and even if some of you guys don't 

        as for my own winnings?  i would not have it all in one spot...i would diversify, including offshore banking establishments in places like switzerland, and since right now the financial situation is very very precarious, i would not own US stock, i would have a large portion of my portfolio in precious metals like gold and silver as well as a small percentage in fixed income triple tax free bonds, but only if they are AAA rated---don't want to lose my shirt and cities can go bankrupt! 

        "It is an old maxim of mine, that when you have eliminated the impossible, whatever remains, however improbable, must be the truth. "

        "I presume nothing. I imagine nothing. Data! Data! Data! I can't make bricks without clay. "

        Sherlock Holmes, The Sign of Four

          visiondude's avatar - eye3logo
          light on my feet
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          Posted: July 16, 2003, 4:30 pm - IP Logged

          MEGA,



          "she" turned

                      "i am .........."meant to"       

          P.S.,  that RJoH  is a stand up guy.  thanks,  vision

                   until further notice,  it's  france everyday

            megamillionaire's avatar - Sphere animated_small_ neg2.gif
            Queens, NY
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            Posted: July 16, 2003, 7:33 pm - IP Logged

            VD

            I saw that. Prov

            Megamillionaire

            Time is a wonderful teacher, but it kills all its students.

            A man must consider what a rich realm he leaves when he becomes a conformist.

              megamillionaire's avatar - Sphere animated_small_ neg2.gif
              Queens, NY
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              Posted: July 16, 2003, 7:41 pm - IP Logged

              MWG

              Lots of good info, thanks. One thing I know about City and State bonds is that if the City or State goes bankrupt the bond holders get paid off first.

              Megamillionaire

              Time is a wonderful teacher, but it kills all its students.

              A man must consider what a rich realm he leaves when he becomes a conformist.

                midwstrngirl's avatar - hair

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                Posted: July 16, 2003, 8:41 pm - IP Logged

                hey visiondude, if you want me to practice on your jackpot, suits me...

                but wait, that presupposes you will win before i do....and i think the jury is still out on whose "system" is better, isn't it?

                "It is an old maxim of mine, that when you have eliminated the impossible, whatever remains, however improbable, must be the truth. "

                "I presume nothing. I imagine nothing. Data! Data! Data! I can't make bricks without clay. "

                Sherlock Holmes, The Sign of Four

                  visiondude's avatar - eye3logo
                  light on my feet
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                  Posted: July 16, 2003, 10:23 pm - IP Logged

                  midwstrngirl,



                  then it's a race to the jackpot.



                  ba da dum ba da dum ba da dum dum dum, ba da daaaaaaaaaaaaa

                  dada dum dum dum.



                  don't worry, i am NOT nervous...



                  VDQUICK PICKLS

                              "i am .........."meant to"       

                  P.S.,  that RJoH  is a stand up guy.  thanks,  vision

                           until further notice,  it's  france everyday

                    Avatar

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                    Posted: July 17, 2003, 12:55 pm - IP Logged

                    This article answers the question I always had: what percentage interest or return would you need on the lump sum to equal or surpass the jackpot? It's currently 7.8%, because of another fact that doesn't get noted much. The lottery's annuity is invested with no taxes taken out; any investment a winner makes on the lump sum is already minus 35% from federal tax, and 5% more from state tax (in MA, where I live) before they've invested the first dollar. That's a lot of ground to make up just to get to the amount the lottery started with.  And if the winner was serious about investing to actually make that 7.8%, they would probably need a financial adviser, lawyer, tax accountant all taking say, 1% more.  And it would also probably help to not spend any of the money on actual living as that would leave you even more in the hole. Let's assume you spend 2% of the money to live it up, that leaves you with 43% less of the original lump sum to invest to somehow get to the amount of the lump sum, never mind the annuity.  

                    Wow. It makes the lump sum look very unappealing. But there are 2 reasons to take the lump sum, even if you know you aren't going to make as much.  Inflation will eat away at the value of the money over 25 years.  And probably most important for many people, you only have to deal with the state one time, not every year.

                    I know what I'd take.

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                     

                      Calscorp's avatar - dnk st
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                      Posted: July 17, 2003, 1:57 pm - IP Logged

                      Midwstrngirl

                      I am really impressed with your knowledge.  I have been reading your posts with great interest.  I really don't have a big plan on what I would do if I actually won it big one day. So the posts on here have been very enlightening. At least, you know where you would start. Do you work in business or is this info based on a lot of research?  I really hope you don't mind my asking but I was curious how you got your info.  keep it coming. Thanks.

                        fja's avatar - gnome1

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                        Posted: July 17, 2003, 2:00 pm - IP Logged

                        even if you took annuity on 260 million wouldnt you still be paying taxes on the annual payments. so are deferred tax payments really better than one lump sum off the top....so what would you actually have for a total after 30 years of payments after taxes?

                        "Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

                          midwstrngirl's avatar - hair

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                          Posted: July 17, 2003, 6:39 pm - IP Logged

                          you got it visiondude!

                          "It is an old maxim of mine, that when you have eliminated the impossible, whatever remains, however improbable, must be the truth. "

                          "I presume nothing. I imagine nothing. Data! Data! Data! I can't make bricks without clay. "

                          Sherlock Holmes, The Sign of Four

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                            Posted: July 18, 2003, 8:03 am - IP Logged

                            I think you have to think of the lump sum as THE jackpot; the annuity is a bit of an illusion to make the real jackpot seem bigger and sell more tickets.  The annuity is the state investing the jackpot for you. If you took the lump sum, presumably you would be investing a lot of it too, but after having paid 40+% in taxes and expenses.  It's actually hard to know what to take, because having the state invest the money for you may pay better, but you never know what the future may hold and 25 years is a long time to have "your" money in a stranglehold.  These days it seems they can stop payouts if you are arrested, or a lawsuit could hold up payments, or the investment could go belly up like the S&L's, who knows - just knowing that the payouts are not absolutely guaranteed could persuade you to take the cash. If you have won more money than you can spend anyway, making the maximum return may not be a goal - if you have $35 million cash now instead of $60 million, does it make a real difference in anything you want to do? I don't think the decision is usually a financial one, I think it's more of wanting to reduce contact with the state to one time as opposed to every year.  So I've "lost" a little money by taking the lump sum - I've got control over the money and my life and I can get the hell out of Massachusetts and never look back.

                            I would certainly get some good advice pro and con from more than a newspaper article before I made my decision. 

                             

                             

                              midwstrngirl's avatar - hair

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                              Posted: July 18, 2003, 3:23 pm - IP Logged

                              i don't think the ability to spread the taxes over several years is an advantage to annuity....because tax laws change....you never know when the government will decide to start conficscating a larger percentage

                              "It is an old maxim of mine, that when you have eliminated the impossible, whatever remains, however improbable, must be the truth. "

                              "I presume nothing. I imagine nothing. Data! Data! Data! I can't make bricks without clay. "

                              Sherlock Holmes, The Sign of Four