If you won 150M would you take a lump sum of 88M? | Page 2 | FerrariChat

If you won 150M would you take a lump sum of 88M?

Discussion in 'Other Off Topic Forum' started by 62 250 GTO, Nov 23, 2004.

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  1. FarmerDave

    FarmerDave F1 World Champ
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    Jul 26, 2004
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    IgnoranteWest
    :D but, alot of things are funnier with the passage of time LOL :D

    I've always heard the rational viewpoint that you take a lump sum, and invest it, but a lottery check doesn't come with a guarantee of level-headedness. Lump sum payment would be easy to blow through quickly, whereas with annuity pmts you would get that euphoric sensation of winning the lottery every single year. The gift that keeps on giving. :)
     
  2. damcgee

    damcgee Formula 3

    Feb 23, 2003
    1,864
    Mobile, AL
    #27 damcgee, Nov 23, 2004
    Last edited by a moderator: Sep 7, 2017
    screw hypotheticals, here is a future value table:

    The interest rate refers to the amount of money you could earn annually if you were to invest all of your lottery winnings.

    As you can see, if you are going to invest your money in just about anything besides gov't bonds, you're better off with the lump sum. However, if you are more focused on capital preservation than capital appreciation, you might consider the annual payments.
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  3. Ron328

    Ron328 F1 Rookie
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    Mar 10, 2003
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  4. damcgee

    damcgee Formula 3

    Feb 23, 2003
    1,864
    Mobile, AL
    Hey, Ron, I haven't seen you on here in a while. I met you at the Memphis Father's Day Ferrari show in June 03. I hope everything is going well for you.
     
  5. jsa330

    jsa330 F1 Veteran
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    Oct 31, 2003
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    88 mil, even before taxes, would do me just fine.
     
  6. coolestkidever

    coolestkidever F1 Veteran

    Feb 28, 2004
    5,538
    NJ
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    Patrick
    Id opt for the 88 mil. So i can invest as much of it as i want.

    When most winners get the lump sum, they go crazy with it and lose alot of it b/c the winners are usually poor and do not know how to handle money. I however would not move out of my house, i would put myself and little sister through college, pay off my brothers student loans, my sisters (if she needs them), pay off my parents mortage. Then buy all the cars i want. I would still even pursue what i really want to do (investment management) even though i dont need the money.
     
  7. damcgee

    damcgee Formula 3

    Feb 23, 2003
    1,864
    Mobile, AL
    I'd be a student and a small business owner for the rest of my life. I would start up small, customer-service driven businesses (sandwich shops or the like) and always be enrolled in a couple of college courses to always be learning.
     
  8. diablo roadster

    diablo roadster Formula Junior

    Jul 31, 2004
    758
    Mountain View
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    Martin
    id take the lump. put it in the back to get some intrest. the first couple years, id probably just live (relativly) simple. get a couple extra million saved up, then buy something worth my time :)
     
  9. gabriel

    gabriel Formula 3


    You are 100% correct.

    I can't believe I keep seeing this question, but maybe it's just because every economics student has learned the math.

    You will make many times your initial investment through capital appreciation, and compound interest by taking the lump sum, not to mention the inflationary aspects.

    And that includes some loss for income generation via it's regular interest disbursements.

    On that amount, you could withdraw enough from the income generating investment part of your portfolio to live very well, and that amount would increase greatly over time, while the wealth generating aspect of your investments (stock & funds) continue to compound.

    With common sense it's win win.
     
  10. CMY

    CMY F1 World Champ

    Oct 15, 2004
    10,142
    Redondo Beach, CA
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    Chris
    Damn-

    http://www.tennessean.com/sii/99/09/04/loser04.shtml

    http://www.ljworld.com/section/worldnation/story/156110

    Personally, I understand the thought process behind wanting to 'help' people, but some of these winners really don't look at the big picture in all of this-- namely, look out for #1. Even if you don't end up broke, you have to watch your back and deal with people looking for a hand-out all the friggin time. Yay.

    Of course, Mr. Whittaker walking around with a half mil in his briefcase and showing it off at a STRIP CLUB really makes me question his intelligence, successful business aside. You might as well walk up and hand the money to your local drug dealer, pimp, La Costa Nostra member, etc and save yourself the physical harm. I'm suprised he wasn't murdered, but then again, like their victim, the theives family tree probably doesn't fork much either. ;)

    I'll never win, but I'd take the lump sum. Since I don't need a Gulfstream V to transport my newly blinged-out posse to various points around the world or feel the need to drop a lot of cash at a titty bar (I see plenty of that for free) I imagine I could easily live off the interest and be VERY happy.

    Personally, before turning in that ticket my existance on this planet would be so covered with smoke & mirrors that I doubt you'd be able to find an address (or blood relative) to send that letter to me begging for a kidney-transplant for your blind-quadrapalygic-transgender 6 year old brother.

    -Chris
     
  11. Hubert

    Hubert F1 Rookie

    Jan 3, 2002
    2,642
    The Left Coast
    My question is : where do you keep Eighty Eight million dollars?
    So sure, fiscally, it's prudent to "invest" the lump sum payout, but it's not as if you can walk down to your local WAMU and deposit an (let me say it again) Eighty Eight Million dollar check - one of many, obvious issues, is the FDIC limit of 100k / account.
    So, you give it to a broker, but there's an associated risk, since he's likely to put in bonds/mutual funds (which, even as low risk, still compose a large risk for someone with a 44 million stake in said portfolio); and, if you're more aggressive (which you'd be a fool for), you put it in stocks and ride the market (again, fool's money and all that).
    I guess you could invest in a larger, stable corporation and buy yourself a board member seat, but I'm unsure how that would work (with regard to gainful employment and salary v. your invesment?)
    Or, you move to Switzerland or Monaco and keep it there?
    Really, what do you actually do, with a sum that large?
    (Forgive my ignorance, but I'm a lowly chemist, not a $$ guru.)
    Awaiting enlightenment,
    Cash Money n00b
     
  12. FIAutoSports

    FIAutoSports Formula Junior

    Nov 13, 2004
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    John Ritenour
    Monaco :drool:
     
  13. CMY

    CMY F1 World Champ

    Oct 15, 2004
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    Chris
  14. maranelloman

    maranelloman Guest

    I would take the 88MM in a heartbeat. Net present value, uncertainty of the unknown over the payout period (I could die, lottery could go bankrupt due to war, famine, civil crisis, plague), potentially greater future tax burdens, etc.

    I assure you, putting most of the principal into laddered tax free minis & other producers of tax free income, and NEVER HAVING TO PAY FEDERAL TAXES AGAIN, would produce more annual income than I could spend after the first 2 or 3 years of giddy consumption.

    Think about it: at a 39% federal tax rate on the 88MM, the remainder would produce a TAX FREE annual income of 2MM, OR MORE, if invested properly. TAX FREE.

    That's enough for me!! :D
     
  15. UroTrash

    UroTrash Three Time F1 World Champ
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    Jan 20, 2004
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    AMT :)
     
  16. maranelloman

    maranelloman Guest


    Not under my plan, Dr. Jellyfinger!
     
  17. UroTrash

    UroTrash Three Time F1 World Champ
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    Why not, are the tax-free bonds not subject to AMT like any other "tax-free" income ?
     
  18. lotustt

    lotustt Formula 3

    Aug 28, 2002
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    TRM
    Lump Sum, Thanks
     
  19. koreanmafia

    koreanmafia Rookie
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    Nov 28, 2004
    36
    I think you can sell your payments. If I could get more than the lump sum by selling the payments then I would do that.
     
  20. wrxrob

    wrxrob Rookie

    Mar 2, 2004
    37
    MD
    I've always wondered this as well. FDIC insurance is $100,000 per account. So do you open 880 accounts?? How in the heck would you know who to trust with all this money?
     
  21. jordan747_400

    jordan747_400 F1 Veteran
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    Dec 9, 2002
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    I think I would be the greatest lottery winner...I would live a very modest life in the small country I just purchased...

    I think I would opt for the 88 million too...I would continue life as a professional student on the path to earnin a phd in pretty much everything. As for the money, I would buy a few cool but relatively reasonable toys, set myself up in a modest house, support my family, give to charities and support my favorite orchestras, support music education in schools, and live life with no financial worries :)

    My parents have promised me that if they ever won the lottery they would pay off my education, and give me a million of my own. If that were ever the case, I would probably take a little bit of money to buy myself an Elise and a Ferrari of some sort, then invest the rest.
     
  22. PrancingHorseFan

    PrancingHorseFan Formula Junior

    Nov 15, 2004
    466
    delaware
    i'd pick the 88 mil. i'd buy an estate worth 8-10mil, then buy every car i can think of with about another 20 or so mil. the rest would go into a bank account, and i'd live on the interest. what a great life that'd be.
     
  23. wrecktech

    wrecktech Formula Junior

    Jun 4, 2004
    368
    Fort Wayne, Indiana
    There was a bankruptcy case in Indiana where a debtor filed for chapter 7 and went through all the formalities. He was discharged and about 6 months later the guy won the lottery and the bankruptcy court reopened the case and attached the funds to pay off all the creditors. I have also heard of debtors that use the buying of lottery tickets as part of their plan to reorganize. Judges don't usually buy that as a "plan"
     
  24. wrecktech

    wrecktech Formula Junior

    Jun 4, 2004
    368
    Fort Wayne, Indiana
    I would have to say I would do the same. 2 million a year is more than enough for me. Nice house, cars and early retirement to enjoy life. The hard part would be deciding which cars to buy.
     
  25. Artherd

    Artherd F1 Veteran

    Jun 19, 2002
    6,588
    Bay Area, CA
    Full Name:
    Ben Cannon
    I'd buy a G-IV, that's $40mil. Then a few $8-10mil houses, and, wait.

    Now all the money's gone.

    I guess $88mil ain't really **** after all.
     

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