Win Powerball Lottery. Take the 30 year payout

Step 1 - place winning ticket in safe deposit box

Step 2 - hire CFP, tax attorney, and incorporation expert

Step 3 - incorporate and make the ticket property of the new corporation

Step 4 - have your attorney collect the winnings as a representative of the corporation so that no one knows who you are

Step 5 - move away from your current town and enjoy your new found wealth in anonymity

Finance Guy wrote:

However, I would also shop around to see whether I could buy a better annuity in the market place that replicates even higher payments for the $454.71 million investment.

You can't. The fair value has already been determined by a select group of bond brokers. Note the first link has sample state income tax implications.

The first business day after a lotto winner is determined the State lottery Commission bids for a portfolio of US Treasury STRIPS from a select crowd of 8-10 bond brokers to fund the annuity. The age-old question of "which is better, annuity or lump cash" is moot -- it's an equal offering (outside of tax considerations). Lottery annuities, unless they are so-called lifetime annuities, are payable to your estate in the event of your untimely demise.

If you win Lotto Texas and you've chosen annual pay, the Texas Comptroller purchases US Treasury securities (zero's coupon bonds / strips) with your winnings. You are "suppose" to receive all monies earned from those investments. And ... each of your 19 OR 24 investments do have CUSIP numbers which you'll read about in a minute.

Example of the bid process

NEW YORK

In order to guarantee that the funds for all of these payments are available, the New York Lottery buys special U.S. Treasury Bonds called STRIPS (Separate Trading of Registered Interest and Principal of Securities). These are also known as zero-coupon bonds (see Financial Pipeline: Zero Coupon or "Strip" Bonds for more details about bonds).

A zero-coupon bond pays a certain amount of money when it matures. For instance, in March 2001, you could buy a zero-coupon bond that would be worth $1,000 in 10 years for about $610. The longer the amount time before the bond matures, the less it will cost you today. A bond maturing in 25 years for $1,000 would only cost about $260 today. If you did the math, you'd find out that if you invested the $260 at about 5.7-percent interest, in 25 years it would be worth $1,000.

When a winner claims his prize, the New York Lottery asks seven different bond brokers to quote a package of bonds that will pay each of the 25 future yearly payments. They buy the bonds from the broker at the best price for the complete package. An investment bank holds the bonds, and each year when one matures, the funds are automatically placed in the New York Lottery's cash account. The funds are transferred to the prize-payment account, and a check is written for the winner.

Typically, the whole package of 25 bonds ends up costing the New York Lottery a little less than half of the jackpot amount.

However, most winners don't opt for annual payments. About 80 percent of winners choose the lump sum option, which is usually about half of the jackpot amount. Since the New York Lottery has to pay a lump sum to buy bonds anyway, it is just as happy to give that same amount of money to the winner instead. It still goes through the process of getting quotations for the bonds, but instead of buying the bonds it pays the winner the amount the bonds would have cost.

Most people take the lump sum because they figure that they can invest the money and do a little bit better than the approximate 5-percent interest that the bonds would earn.

Most U.S. lotteries take out 28 percent from the winnings to pay federal taxes. But, if your winnings were in the millions of dollars, you would be paying closer to 39.6 percent (the highest tax bracket) in federal taxes when tax time comes. Add state and local taxes, and you might end up with only half of your winnings when you are done paying taxes.

If you had opted for the lump sum prize in our $10 million lottery, the prize would be about $5 million. After federal and state taxes, you'd be left with about $2.5 million.

nah. Cities are going broke. Grab the money while you can. You can always lock it up and live on a stipend.

But leaving it for someone else - the lottery commission - to manage is a bad decision.

30 year option? Fail.

Time value of money. Look it up.

I had an old co-worker who walked away with 2.6 mil from a state lottery. Quit his job that same day and was back working along side of me in less than 2 year. This was a long time ago when having a million dollar made you rich. He was going through a divorce, but it wasn't final, he waited to cash in after his divorce was final. His ex-wife sued him when most of the money was gone and he pay her money that didn't have anymore.

I had an old co-worker who walked away with 2.6 mil from a state lottery. Quit his job that same day and was back working along side of me in less than 2 year. This was a long time ago when having a million dollar made you rich. He was going through a divorce, but it wasn't final, he waited to cash in after his divorce was final. His ex-wife sued him when most of the money was gone and he pay her money that didn't have anymore.

The good news for this woman is that her exhusband died in a hit and run.

One less person to go after her money for any reason.

X-Runner wrote:

The good news for this woman is that her exhusband died in a hit and run.

One less person to go after her money for any reason.

The stories you hear about friends and family members hitting you up for money is true. As soon as the word got out about his money, he go visits from family members he didn't know he had. Everyone says they won't give their money away, but everyone does. It's much easier to give out money that you didn't earn. I think I read somewhere that lottery winners lose half their money to family and friends.

X-Runner wrote:

[quote]fisky wrote:

Look at Kevin Bacon.

Successful. Seemingly smart guy.

Gave a bunch of his money to Bernie Madeoff.

Smart people can be just as greedy as dumb people. Going with madeoff was a pure greed thing. It was a beyond sketchy situation.

Whatni would do with say 200 million?

20 million across a half dozen annuity companies. Low return(about what lottery uses) very safe . Gives a floor of like 600k for then rest of your life

Another 10 million in various foriegn annuities in case the us goes to hell

100 million in a standard 60/40 fund. Expectations will be for this to return ~7%

70 million for blow and hookers. Or charity or high risk investments

The tough part with a ton of money isnt investing it. You invest a billion the same way you do a million. It would figuring out how to deal with estate issues

X-Runner wrote:

Bernie Madoff wrote:

You should get the lumpsum and invest it in a high yield vehicle.

You mean like a Bentley so you can get a lot of tail?

Well played, sir. (golf clap)

Powerball buys U.S. Treasuries. The annuity is not solely dependent on Powerball's credit rating.

The annuity is graduated and steps up every year. It's not fixed per year.

The annuity pays out all 30 payments no matter what. It doesn't end if the winner dies.

I'd still take the lump sum, but some of the considerations used above are not accurate.

So she will receive about $300M after taxes.

When you have that kind of money, you just put it into T-bills or something with a guaranteed and stable rate-of-return. You don't take chances with it. Like Flagpole said, YOU WOULD NOT LOSE IT.

Even at a measly 3% return, that is $9M a year. You wouldn't lose the money, you would just keep gaining. Even if you spent $2M a year (which is likely when you are that rich), even with the ongoing taxes every year, you would be worth $350M after 10 years.

Do the math.

[quote]Timmy Toe Tows wrote:

She'll still have about 240 million after taxes. Not too bad.

Not bad but far from the advertised $758.7 million.

The hucksters lie, lie, lie.

I'm pretty sure I'd take the annuity. 25m is enough to last me multiple lifetimes, so an extra 700m doesn't really make me any richer, but it's definitely way more of a headache to manage. However, if I'm wrong and I can somehow, inexplicably burn through 25m before I kick the bucket, it's not a big deal - I'll get another shot just a short year later. And the year after that. And again, and again...

Even if the lottery goes belly up after a few years, you still end up with 100+ mil, and if you can go bust on 100m then I think it's far to say you'd go bust with any amount.

I'd probably take the annuity to protect myself from myself. It's not just leaches that would be coming after your money, but tons of people with seemingly "good investments."

And since I honestly have no idea what I would do with $400M or $240M or whatever, I would probably be charmed by these investments and put money into them.

Given that amount of money, aren't there charities you would want to contribute to? Or friends with businesses you would want to invest in? I know I would. And I'd prefer to do it a little at a time, and if I really screw it up, know that next January, another $25M check is coming in.

It is an absurd amount of money. I would live quite comfortably on $5M total. In fact, I plan on retiring when I only have $2M. So, I don't know what I would do with Powerball kind of money. Probably give most of it away.

What the hell do people do with all this money? The nicest vacation I've ever went on cost about $5k per week, for 3 weeks. So, if I went on the nicest vacation I've ever been on, for the rest of my life, it would cost me about $260k per year. It seems absurd to me that anyone could spend more than that per year.

I'd take the lump sum. Being in finance, I'd be able to manage it.

Let's say it's ~$240 million after taxes.

$200m across a few safe investments (savings accounts, low risk bonds, t-notes, etc.), yielding 2.5% (intentionally lowballing that figure). That's at least $5m for the first year and, with compound interest, you're continually adding to that money.

$20m - trust funds for my children ($10m each)

$10m - paying off parent's and sibling's student loans, mortgages, etc. as well as setting up modest trust funds for my nieces and nephews and gifting money to family members

$10m - blow immediately to get it out of my system ($5m for me, $5m for my wife). Teslas, $10k tri-bikes, etc.

I'd go with the lump sum because at age 53 you're more likely to be able to take advantage of it than at age 83. Your life expectancy is only a little more than 83 anyway (87 according to some online calculators).

I stopped playing.

Unless you know the tax loopholes and how to

manage money, putting it a bank would be futile.

Anybody notice how their neighborhood banks

shutter up every five years? Somethings up.

Unless putting the payout, in a bank that caters

to the wealthy and/or setting up a blind trust,

not only do you get taxed on the winning, but the

interest income as well, that's no fun?

Money ain't everything better to thankful for

what you've got more so, if your healthy that is

worth more than any amount of money.

YduxDsftyccfyscfhuauxdf wrote:

The tough part with a ton of money isnt investing it. You invest a billion the same way you do a million. It would figuring out how to deal with estate issues

You don't invest a billion the same way you invest a million.

With a million dollars, you buy yourself a nice house.

With a billion dollars you may buy a number of properties or get into commercial real estate.

It looks like all of the people saying to take the lump sum want to invest it all in mutual funds just to see the number grow.

Why not buy a business and run it?

You could employ people and work to make the company grow.

I still think those wanting the payout are more about the challenge of earning more over time than the annual payouts would be.

They want more money.