If You Won The Lottery, Would You Choose A Lump Sum or Annuity Payments?

Most people are not aware of the fact that most of the big lotteries offer two distinctly different ways of having your prize money paid out should you win the jackpot.

Lump sum or annuity payments. What would you choose if you won the lottery?


Lump Sum

Most people, when they think about the possibility of winning the lottery, only think about how wonderful it would be to win a huge amount of money. And they imagine that when they win the lottery, they will get a lump sum of, say, five hundred million dollars straight to their bank account the next day. This is not completely wrong. The process of transferring the money may take a little longer than 24 hours. In fact, it could take up to 15 days. This may be a little disappointing for someone because imagine that you’ve just won the lottery and have a serious debt situation. You are the legal winner of hundreds of millions of dollars. Still, you can’t get a few thousand bucks to pay that loan. Also, this 15 day period is a very long wait for some people, because they may have a huge list of things that they want to do with their money, yet cannot get started spending right away.



Possible Bankruptcy

But this is a short lived “problem,” and intelligent lottery winners should embrace this period of time to sit down and really have a long, hard think about what they should do with all that money they’ve just won. Think about it, a few hundred million dollars is not a small sum of money. There are many stories out there about lottery winners who won ridiculous amounts of money only to spend it all within a very short time period and end up where they started – completely broke. Yes, I know, it sounds incredible…still, it’s true. It is possible to win hundreds of millions of dollars and yet lose it all in a short time. So, a few weeks of serious thinking would not be amiss. And here we go straight to the matter of this article. Because as a grand prize lottery winner, you have the right to choose to receive your money in one of two ways.


Perhaps it would be a lot safer to get your prize money as annuity payments when you win the lottery?

Annuity Payments

When you win the lottery, the lottery will ask you if you want the prize in one lump sum or paid out annually over a long period of time, most often than not around 30 years. But wait! How can anyone thin it better to get your money yearly, like any other salary-slave out there, you might say. After all, if you win, say, three hundred million dollars and choose to get your prize in annual payments, you will “only” get around ten million dollars per year. Sure enough, better than the standard salary of 40.000 dollars that most Americans get, but still, not enough if you want to spend some serious cash. Let’s say you want to buy a 100 million dollar house, for example. Or give away 30 million dollars to charity. How on earth will you be able to do this if you only get ten million dollars yearly? Would you then need to take out a mortgage?


Think About It

That would be very funny, indeed. And you’re absolutely right. The best thing if you look at the matter from an investment point of view, is to “take the money and run,” as they say. This means that you will be able to invest each and every penny of the whole prize exactly the way you want. And most people who win the lottery would surely think that this would be the best way to go about it. But wait! Remember what we said about those lottery winners that managed to lose all their money in an absurdly short time? Yes! It is possible. And if you’re not a master investor, are you completely sure that you have the geniality and willpower that is needed to succeed in your investments? Are you sure that you will not suffer severe attacks of the spend-all-you-can-as-fast-as-possible virus, and perhaps even erase your entire fortune in a relatively short time?


You Decide

In that case, it would be much better to opt for annuity payments. Provided you’re not over 50 years old, that is (in this case you would probably be better off taking a lump sum and focusing on intelligent investment choices). These annuity payments would make it virtually impossible for you to lose your money. It would be a virtual guarantee that you would receive an extreme salary each and every year for years. A salary that you can live lavishly for. Lavishly, but not super-lavishly, so this is where you need to balance your thinking. Do you want a lot of money in a lump sum, so that you can invest the money any way possible, or simply one or two million dollars per month? You decide – when you win the lottery! Check the latest lottery results.


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