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Old 10-25-2010, 06:55 AM   #81
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a friend of mine won 500K in the lottery. In his state, there were no lump sums, so he was due a check every year for 20 years. One bad marriage later, and he sold it to one of those companies that purchase the annuity. I don't know what he got from that, but he didn't keep it for long--his attorney got alot of it, as did the IRS, because he neglected to pay his taxes for a decade or so. He's not what I call a spendthrift--he didn't buy a bunch of useless crap he couldn't afford, but he just made several poor choices.
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Old 10-25-2010, 07:16 AM   #82
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I agree. Considering the great majority of businesses fail, I don't understand why people do it. Especially since a lot of those sums are easily sufficient to provide a great income if they just were to buy t-bill and cd ladders.

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It definitely seems to me that the largest amount of money is lost by winners with absolutely no business experience starting businesses. They have profiled winners starting up hotels, restaurants, auto dealerships, record labels, and manufacturing business. Given the amount that is lost by experienced people starting businesses, it is no surprise the less experienced do even worse.

OTOH, it seems some of the most grounded start small businesses (i.e. low overhead) with no real anticipation of making a profit, just doing something they love and keeping themselves busy.
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Old 10-25-2010, 07:25 AM   #83
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I'm not seeing the numbers here for why she took the lump sum. I think in this person's case, they should've taken the payments. It's not a given that lump sum is better.


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Hi, I am a lottery winner of 8.2million. I was featured in the last episode of "the lottery changed my life" this last week. The lump sum is the best way as of yet. When I had won I talked to many investors and this is what i had learned. Out of 8.2million I recieved 2.3 million. Doesnt matter what you do for annuity or lump sum, the government rakes in the majority. If i invest 2 million and live off 6% interest, using historical data I would have 55 million in the bank still living off 6%. As opposed to have gone through 8.2 million at the 25 year mark. If you dont have the self control to keep to a plan take the annuity otherwise and plan to be broke in 25 years. I was the last 10 min featured with the youngest lottery winner of 19years old. hope this helps.
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Old 10-25-2010, 07:56 AM   #84
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I'm not seeing the numbers here for why she took the lump sum. I think in this person's case, they should've taken the payments. It's not a given that lump sum is better.
It's not necessarily about numbers. It can be about control. Also discipline. I would take the cash any day, since who knows what will happen to the poor people tax lottery system over 20 years. Plus, this poster said they were 19 when they won. He/she will only be 39 when the annuity ends. If you get used to living on the cash and don't get a life and career going, that could be a disaster. Obviously, it can turn out well or poorly either way. But I'm a bird in hand guy (see the annuity vs. pension thread), and maybe the winner is too.
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Old 10-25-2010, 08:49 AM   #85
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Six percent wasn't a safe withdrawal rate in 2007 and it isn't now. I suggest that you look at the FireCalc tool at the bottom of the page and run some scenarios. Four percent is the historically "safe" withdrawal rate.
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Old 10-25-2010, 09:45 AM   #86
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Hi, I am a lottery winner of 8.2million. I was featured in the last episode of "the lottery changed my life" this last week. The lump sum is the best way as of yet. When I had won I talked to many investors and this is what i had learned. Out of 8.2million I recieved 2.3 million. Doesnt matter what you do for annuity or lump sum, the government rakes in the majority. If i invest 2 million and live off 6% interest, using historical data I would have 55 million in the bank still living off 6%. As opposed to have gone through 8.2 million at the 25 year mark. If you dont have the self control to keep to a plan take the annuity otherwise and plan to be broke in 25 years. I was the last 10 min featured with the youngest lottery winner of 19years old. hope this helps.
I think finding 6% will be tough these days. The best thing to do would be to "forget" you won the lottery and get a job and keep it and live frugally, and let the money compound. Take a small sum and pay off any debt and go on a nice trip, etc. But let that money compound and don't let any relatives or friends talk you into "can't miss" business deals.........
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Old 10-25-2010, 10:17 AM   #87
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. we lost alot of money and have since started a business to help support our parents. We commited to our parents and helping them retire but it is starting to be our downfall. I would hate to tell my parents i cant keep sending you money, but i dont want to lose whats left for my retirement. sticky pickle. but the recovery of the market has helped. I will go back to work as a RN when this business is successful enough to keep going with a manager. One i trust anyway.
As others have mentioned, and you probably know already, you're in a rough spot. You've bought a business, but it sounds like you are still busy running it, which means that you actually "bought yourself a job." That can be a good option for some people, but an RN can earn secure and decent pay without going this route. For what it's worth, I think your time would be much better spent in studying up on how to manage money.

I think there's a good case to be made for an honest heart-to-heart with your parents. Every parent wants their child to have things "better" than they did, so they won't want to undercut your financial stability in order to retire earlier.

From the sound of things, the annual payments would have been a better option for you. Still, you need to play the cards you still have in your hand right now and not look back.

Best of luck. The folks here will be happy chime in with suggestions.
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Old 10-26-2010, 10:04 AM   #88
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We did a lot of asking around and research and really was under the impression that 6% was reasonable. We have started a trust and are always on our gaurd for scammers. Regardless, we both are working and keep a tight reign on expenses. Our biggest problem at the moment is we commited to helping our parents and it is costing us too much. thanks for the advice all.
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Old 10-26-2010, 10:34 AM   #89
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We did a lot of asking around and research ...
It'd be interesting to read more about what you did. Got any links?
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Old 10-26-2010, 10:44 AM   #90
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I'm not seeing the numbers here for why she took the lump sum. I think in this person's case, they should've taken the payments. It's not a given that lump sum is better.
Everyone seems to be assuming that evodbor is 19 years old. I don't read his/her post that way. It says s/he was in the last 10 minutes of the program "along with a 19 year old".
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Old 10-26-2010, 10:54 AM   #91
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Judging from all the TV and late night radio ads offering to buy annuities,lottery payment streams, and structured settlements, a lot of people just want the money. Add that to today's possibly bottoming tax rates, possible heavy duty inflation looming, it looks to me like the cash option is likely best. Certainly if you think you will want to liquify the payments stream, do it at the outset, not by answering a TV ad.

So good luck Evo.

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Old 10-26-2010, 11:40 AM   #92
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Add that to today's possibly bottoming tax rates, possible heavy duty inflation looming, it looks to me like the cash option is likely best.
Yes, probably in an absolute sense. But there are likely many individuals who'd be well served by annual payouts. The case we are talking about: $8.2 million would be annual payouts over 25 years of $328K. Assume taxes take 50%, so you'd be left with $164K. Give 50% of that to Mom(s) and Dad(S) (I don't know if we've got one set of parents or two here) and each set would get either 82K or 41K per year for 25 years. ("Mom and Dad, thanks for everything. This money is yours, but it only keeps coming lasts for 25 years. I suggest you put away enough from each check to last the rest of your lives. I'll need the rest to take care of me and my kids--your grandkids. I know you'll understand"). There--mom and dad are taken care of, and I'll still be getting $82K per year for 25 years. Buy an inflation-protected annuity for much later payout with some, take some every month to improve the QOL while working, and put the rest into safe investments that will keep up with inflation while you learn about investing. In 25 years you'd be in great shape.
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Old 10-26-2010, 11:45 AM   #93
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$2 million is a lot of money, but it won't enable a young person to quit work and live like a king. Most investors would estimate it would allow a person to safely take out $60K to $80K per year for 40-50 years or so, maybe longer. That can allow a comfortable lifestyle in many parts of the US.
I'll second that, Two million is a lot of money, and then again it isn't a lot of money. if the OP doesn't want to keep working then that money will have to be managed well to support a middle class lifestyle going foreward.

If I were to advise the OP, I would suggest that you spend a small portion of the proceeds on a house and maybe a car and invest the rest. You could keep working and let the invested proceeds snowball.
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Old 10-26-2010, 11:52 AM   #94
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In 25 years you'd be in great shape.
People capable of that long-term thinking seem unlikely to invest in lotteries, and people who successfully invest in lotteries seem unlikely to encounter the professional advice that would give them these recommendations...

I occasionally wonder what I'd do if a million bucks gratuitously ended up in my life. I think it'd be a responsibility burden and I'd be perpetually attempting to optimize it for whatever purpose I apply it.
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Old 10-26-2010, 01:51 PM   #95
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I think some are confused about who I am in the program. I am a male Registered Nurse that is at the end of the program "the lottery changed my life". We are the last 10 minutes. The main person that is listed for that episode is a 19y.o. male that was youngest lottery winner for that lottery. This forum is helping me considerably. We have all of our money invested at the moment living off interest. But working a new business. We started the business to get the experience of running one and help our parents. My wife has experience in starting a business so her involvement has been a lifesaver. We are cautious about what we do with our money and will make it last, even if it means cutting off our parents. I told my parents in the begining to not count on the money in their day to day lives. hopefully they havent. I have decided by January that I will have to cut them off for awhile until the business is profitable. Me and my wife are dogmatic about making this business work. We are finding it difficult to find reliable employees at the moment though. thanks for your imput all.
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Old 10-26-2010, 04:10 PM   #96
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I think some are confused about who I am in the program. I am a male Registered Nurse that is at the end of the program "the lottery changed my life". We are the last 10 minutes. The main person that is listed for that episode is a 19y.o. male that was youngest lottery winner for that lottery.
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Everyone seems to be assuming that evodbor is 19 years old. I don't read his/her post that way. It says s/he was in the last 10 minutes of the program "along with a 19 year old".
Yeah, my fault. I misread the post. Sorry about that. But I'm glad you're older and (hopefully) wiser than a 19 y.o. If I'd have gotten $2M at 19, I can guarantee you I wouldn't have made it to 20. Probably wouldn't even have left a pretty corpse.

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People capable of that long-term thinking seem unlikely to invest in lotteries, and people who successfully invest in lotteries seem unlikely to encounter the professional advice that would give them these recommendations...
Not necessarily. Many people take an occasional flyer on a lottery ticket. I bet there are plenty of winners who have handled the money wisely. Now if you are talking about those "investors" who play every week and base their retirement plans on winning, then no argument there. All you can do in those cases is hope they win enough that the income exceeds their capability for foolishness.
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Old 10-26-2010, 04:32 PM   #97
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I told my parents in the begining to not count on the money in their day to day lives. hopefully they havent. I have decided by January that I will have to cut them off for awhile until the business is profitable.
In my previous life when I was one of the owners of a large firm with about 350 employees, we had a lot of this problem with respect to bonuses. We would tell the employees that they should not ever count on receiving a bonus, that it was based on current profitability, and that it could decrease or disappear in the future. Inevitably, we would have a 1-2 year period of great bonuses followed by nothing. The bankruptcies and gnashing of teeth would then start because the employees could not make the house / credit card / vacation home / boat payment without the expected bonus.

You can't win. I hope your parents do better.
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Old 10-26-2010, 10:09 PM   #98
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Hi, I am a lottery winner of 8.2million. I was featured in the last episode of "the lottery changed my life" this last week. The lump sum is the best way as of yet. When I had won I talked to many investors and this is what i had learned. Out of 8.2million I recieved 2.3 million. Doesnt matter what you do for annuity or lump sum, the government rakes in the majority. If i invest 2 million and live off 6% interest, using historical data I would have 55 million in the bank still living off 6%. As opposed to have gone through 8.2 million at the 25 year mark. If you dont have the self control to keep to a plan take the annuity otherwise and plan to be broke in 25 years. I was the last 10 min featured with the youngest lottery winner of 19years old. hope this helps.
Are you married?

Just kidding...congratulations.
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Old 10-26-2010, 11:54 PM   #99
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I'm also mystified about why so many lottery winners start businesses. Over 90% of businesses fail [edit: actually, this is probably not accurate--it may be more like 60-65%], and most of these lottery winners that I'm aware of do not come from a place in life that would indicate they could beat those odds.

I'm not denigrating them--I know for a fact I have no business being in business (). I would go the passive income route because to me that is an almost guaranteed means of retaining sufficient income and in fact it is possible to significantly add to it.
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Old 10-27-2010, 09:47 AM   #100
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I'm also mystified about why so many lottery winners start businesses. Over 90% of businesses fail [edit: actually, this is probably not accurate--it may be more like 60-65%], and most of these lottery winners that I'm aware of do not come from a place in life that would indicate they could beat those odds.

I'm not denigrating them--I know for a fact I have no business being in business (). I would go the passive income route because to me that is an almost guaranteed means of retaining sufficient income and in fact it is possible to significantly add to it.
Some sort of fantasy.
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