How would you invest a lottery winning of $10,000,000?

[jIMOh]

$10 M??
$5 set aside for taxes

the other $5 M-
$1 M in TIPS
$2 M in dividend mutual fund with a 3% yield
$1 M in REITs
$1 M in muni bonds

 

[kyounge1956]

Aren't those large lottery wins paid out over 20 years?

So a 10,000,000 win would actually be $500,000 per year less taxes you'd have to figure out how to live & invest on.

Heck, I'd probably just max out my IRA's for the year & blow the rest on travel & fun.

When it runs out in 20 years I'd live off the IRA's.

I believe you'd have to continue to w*rk in order to do this. Don't you have to have earned income to put the money in an IRA?

 

[Texarkandy]

I believe you'd have to continue to w*rk in order to do this. Don't you have to have earned income to put the money in an IRA?

Oh yeah - ok, well forget the IRA part then - party on!

 

[kyounge1956]

I believe you'd have to continue to w*rk in order to do this. Don't you have to have earned income to put the money in an IRA?

Oh yeah - ok, well forget the IRA part then - party on!

It's probably better that way. After all the maximum IRA contribution is only $5K a year plus another thou if you are over 50. I don't have my calculator to hand so I'm just guessing, but even if you completely maxed your IRA every last one of the 20 years and we had a bull market the whole time, I doubt you'd be able to continue with a comparable lifestyle to the half-million-less-IRA that you would have been enjoying for the previous 20 years!

 

[Culture]

You'all think different from me. It is the rich that can afford to take chances. I think I would use close to the same allocation I have now:

5% gold
35% short term bonds (treasuries)
15% Large cap US Index
10% Mid cap US Index
10% small cap US Index
15% oversea developed US Index
5% overseas developing US Index

Balance once per year

 

[NW-Bound]

Would not be too different than what I have done (with a smaller sum of course)

30% in safe places like T-bills, CDs, bonds, etc...
35% sent to Buffet,
the other 35% I take to the Scottrade casino.

A guy can't travel all the time. It gets tiring after about 3 weeks. Then one needs a period of rest of a few months before going out again. Other than watching over your stocks with all that free time, what's a guy to do?

 

[bbbamI]

Spread 9.5M among several banks, then "invest" the rest in Vegas....O0

 

[slazenger]

I'd be pretty conservative with that kind of money, but I'd probably shoot for at least 40% stock overall still.

 

[clifp]

I'd bet it all on the pass line at the crap table in Vegas or Atlantic city. 10 Million just isn't enough to scrape buy you need $20 mil

 

[Walt34]

I'd invest in an RV, a boat, an airplane, a Harley, beer, dancing girls....

And oh, yeah, put a couple million in the bank for hard times.

 

[CuppaJoe]

George Vanderbilt inherited $10,000,000 in 1885 and invested part of it in this country cottage:

Visit Biltmore - Biltmore House

 

[FinanceDude]

George Vanderbilt inherited $10,000,000 in 1885 and invested part of it in this country cottage:

Visit Biltmore - Biltmore House

Nice house, nut $10 million back then is like $10 billion today.......

 

[CuppaJoe]

Nice house, nut $10 million back then is like $10 billion today.......

Yeah, yeah, tell it to poor slighted George.

His brothers each inherited $60,000,000 and were able to build their country cottages at the more expensive fashionable Newport:

House Tour

Now I understand why forum members say they enjoy house surfing.

 

[bbbamI]

I'd invest in an RV, a boat, an airplane, a Harley, beer, dancing girls....

And oh, yeah, put a couple million in the bank for hard times.

I like your idea better! Of course I would have to change one of the "investments".......

 

[ziggy29]

The first thing I would do is secure a decent income stream by taking $2M of it and putting it in a number of different inflation-adjusted SPIAs with different insurers -- basically "buying a pension" with 20% of it.

Then I'd probably put about half of the rest ($4M) in TIPS and the final $4M in a total market index. As I wouldn't suspect I'd ever need the stock portion of it for income, I wouldn't be too stressed about the current market. I'd mostly be growing it for my estate.

 

[harley]

I'd invest in an RV, a boat, an airplane, a Harley, beer, dancing girls....

And oh, yeah, put a couple million in the bank for hard times.

I suspect you'd have to put half away for the divorce.

I'd keep $2M for fun, and invest the rest in my standard AA. I'm pretty happy now, and well aware that too much fun can kill me. I gave it a good try in my earlier life, and only my limited funds kept me alive then.

I think I'd hang out with Brewer. That sounds safe.

 

[Frugality_of_Apathy]

I'd bet it all on the pass line at the crap table in Vegas or Atlantic city. 10 Million just isn't enough to scrape buy you need $20 mil

Why not bet the hard 8?
Isn't 100 Million even better?

 

[clifp]

Why not bet the hard 8?
Isn't 100 Million even better?

The house advantage on the pass/no pass line on craps is pretty low 1.4%. (less if you take odds) The house advantage for Hard 8 is 9%. You'd be better off letting your pass bet ride 3 times. Still your instincts are good, even if the execution isn't the best.

Of course winning the lotto requires making a particularly stupid bet, worse than Hard 8. As a sophisticated gambler, I am a firm believer in doing foolish things, in an intelligent fashion.

As my brokerage statements would prove.

 

[Dennis]

reply

A Person at our local Senior Center won a Lotto for $4 million, netted about $2.5 million after taxes

There are several Investment Volunteers , including myself that work there
1. Recommended to put The Money in a Money Market Account for at least 6 mos.. and don't touch it..
2. Start Going to see at least 3 different Advisors/Firms
3. Including having an Estate law firm & a CPA Firm for consultation

First priority? Paying off current , if any bills
2nd-Preservation of Capital
3rd- Earn Inflation Rtns to retain buying power
4th- via thru Lowest Tax implicatiions
5th- making a list of Priorities , Wants, Desires..it can buy
6th- Relocate. With No forwarding Address, nor phone # to be botherd by the Thousands that will be bothering you, both in writting and in Person for Money..

The Man and his Wife did all this and are doing fine today.. It's been 3 yrs and they have everything all laid out, spent about 25% of it and invested the rest...

Last I heard about 2 yrs ago, they had about a 20/80 portfolio of variouos types of Bonds, Muni's and Some Balanced Funds..
and I think about 40% in a Charitible Trust..

Hope this helps

 

[Frugality_of_Apathy]

The house advantage on the pass/no pass line on craps is pretty low 1.4%. (less if you take odds) The house advantage for Hard 8 is 9%. You'd be better off letting your pass bet ride 3 times. Still your instincts are good, even if the execution isn't the best.

Of course winning the lotto requires making a particularly stupid bet, worse than Hard 8. As a sophisticated gambler, I am a firm believer in doing foolish things, in an intelligent fashion.

As my brokerage statements would prove.

Ah but house odds only come into play as your number of bets increases.

If the goal was to reach around 100 million as quicklyas possible your odds are much better with my strategy.

There's a 9.09% chance of winning a hard 8 bet.
Betting the line you'd have to win 4 times in a row for 80 million the odds of which doing is 6.03% or 5 time in a row for 160 million which has a 3.01% chance.

The longer you play the more likely the house is going to win.

 

[Tadpole]

Is that $10M before or after taxes?

 

[clifp]

Ah but house odds only come into play as your number of bets increases.

If the goal was to reach around 100 million as quicklyas possible your odds are much better with my strategy.

There's a 9.09% chance of winning a hard 8 bet.
Betting the line you'd have to win 4 times in a row for 80 million the odds of which doing is 6.03% or 5 time in a row for 160 million which has a 3.01% chance.

The longer you play the more likely the house is going to win.

True that is the secret to casinos making money. However, your calculations are wrong you only need double up three times to hit 80 million or roughly 12% chance to get 160 million is the 6% chance. After hitting the 80 million mark you could keeping gambling 20 million to exactly hit the 100 million mark. (There is some long forgotten formula for figuring that out) Or you could elect to economize on the life style and scrap by on only 80 million

 

[Frugality_of_Apathy]

True that is the secret to casinos making money. However, your calculations are wrong you only need double up three times to hit 80 million or roughly 12% chance to get 160 million is the 6% chance. After hitting the 80 million mark you could keeping gambling 20 million to exactly hit the 100 million mark. (There is some long forgotten formula for figuring that out) Or you could elect to economize on the life style and scrap by on only 80 million

Ouch!

That's what I get for just doing the math in my head instead of writing it down. I must have counted just winning the lottery as one of the gambles. But if you did hit the 80 and then just gamble once more with a 20 to hit 10,000,000 your total odds would still be 6% as it only matters how many times you bet, not the amount.

You could decide to live with 80 million(if you can call that living) then you would indeed have the better odds.

 

[BunsGettingFirm]

You mean besides two girls at the same time? If I ever get on the board of the CFAI, I would make that one of the answers to a CFA portfolio management question.

 

[Finance Dave]

I'd invest in a well diversified portfolio of stocks, bonds, and cash funds just as I do my current portfolio...although admittedly I'd probably take the risk down a notch or two just to sleep better when the market moves.