Re: $.95 Billion
Lotteries ARE essentially a surcharge on those who are bad at statistics.
They rationalize that they MIGHT win, and, as someone DOES, they think, well, it COULD be me.
Its wishful thinking, and, it rakes in billions of dollars from all the people who thought, well, it COULD be me.
As for what to do with it all, I like the idea of setting of a philanthropic fund.
As for lump vs annuity, I'm thinking the annuity return is conservative, but guaranteed, but a private investment is more aggressive, even a SP500 type mutual fund for example.
The tax rate on the lump sum blasts you upfront. You still owe 10% year on earnings with it. I'm not sure how they tax you on the annuity...I'm sure taxes are taken out annually at least?
If the entire annuity payment is taxed as income every year, would be at the massive 39% federal rate for that high an income, or considered capital gains on investment? Hmmm, income I'm guessing...as YOU didn't invest it.
The 10% would be on the earnings of investments you made with the left over annuity $, OR lump sum $.
I guess it might depend on the state, I know they can be different....some tax money you earned but didn't yet receive, like NY.
So, I suppose the short answer is to take the annuity unless you think you can beat the rate of return by a few percent, in which case, you'd earn more investing the lump sum.
If doing a venture/business/philanthropic organization, I'd probably go annuity as its safer, and if the biz goes bust, you are not screwed and glued.
From what I've read at least, the average winner takes the lump sum, spends like crazy because they cannot fathom a way for it to ever run out, and, then, they they figure that out, and declare bankruptcy, etc.
Lotteries ARE essentially a surcharge on those who are bad at statistics.
They rationalize that they MIGHT win, and, as someone DOES, they think, well, it COULD be me.
Its wishful thinking, and, it rakes in billions of dollars from all the people who thought, well, it COULD be me.
As for what to do with it all, I like the idea of setting of a philanthropic fund.
As for lump vs annuity, I'm thinking the annuity return is conservative, but guaranteed, but a private investment is more aggressive, even a SP500 type mutual fund for example.
The tax rate on the lump sum blasts you upfront. You still owe 10% year on earnings with it. I'm not sure how they tax you on the annuity...I'm sure taxes are taken out annually at least?
If the entire annuity payment is taxed as income every year, would be at the massive 39% federal rate for that high an income, or considered capital gains on investment? Hmmm, income I'm guessing...as YOU didn't invest it.
The 10% would be on the earnings of investments you made with the left over annuity $, OR lump sum $.
I guess it might depend on the state, I know they can be different....some tax money you earned but didn't yet receive, like NY.
So, I suppose the short answer is to take the annuity unless you think you can beat the rate of return by a few percent, in which case, you'd earn more investing the lump sum.
If doing a venture/business/philanthropic organization, I'd probably go annuity as its safer, and if the biz goes bust, you are not screwed and glued.
From what I've read at least, the average winner takes the lump sum, spends like crazy because they cannot fathom a way for it to ever run out, and, then, they they figure that out, and declare bankruptcy, etc.
:twothumbs
:devil:
