You could say that the chances of winning in a live casino in Malaysia or in a lottery are abysmally low, but in the off-chance that you do win it all, what is the best thing that you can do with the money that you’re going to get?
Lottery jackpot winners, in particular, win millions (or even billions) of money if they hit the jackpot, that’s assuming that they are the only one who won it all.
Now, the question remains: what is the best thing that you can do if you win such a huge amount of money? Read on to find out some tips.
Decide Whether You Want Lump Sum or Annuity
When you win the lottery, you will have the chance of either getting the entire amount that you win or the lump sum or if you want, you can also let the organization know that you want it given annually (also known as an annuity).
If you consider going for the annuity, you will get your lottery payments over time; typically, about a couple of millions per year for 20-30 annual payments (depending on the money that you won and the organization that you are playing with).
So, let’s say that you won over a billion dollars and you chose an annuity, you will be given 30 annual payments with an average of $37 billion/ year. The good thing if you take this option is that you will get more money than what you won in the lottery, simply because the value of the money adds up over time.
Now, assuming that you went for the lump sum. You will be given around $650 million, assuming that you indeed win over a billion dollars in the lottery. Now, why did you get a substantially lower amount than what was stipulated in the jackpot? Well, that can be attributed to a couple of factors.
One is the tax that is inherent in every lottery wins. Second is the state taxes. Not all taxes have the same calculation for taxes which means that in some states, you only have to pay a small amount, while you have to pay a huge sum of money in other states.
Still, you will still earn a lot of money over time, assuming that you are going to invest your money in something that is going to be lucrative over time. Or you can simply invest it in a financial institution and take advantage of compound interest.
So, Which One is Best for You?
Well, you can basically go with either one of them as they both have clear advantages and disadvantages. But, if you were to ask people who have crunched the numbers, they actually recommend that you get the lump sum instead. Here’s why:
When you invest your money and you take advantage of compound interest, the interest is usually in percentage terms. So, let’s say that the interest is 2.5% per year and assuming that you’ve invested $500 million, you are going to have $1.25 million in your bank account thanks to the interest.
Also, if you invest in some high-paying stocks, then that will also increase the money that you have right now as well. Just make sure that you invest it in things that are sure to give you some revenues.