Winning the Lottery!


It’s easy to get excited when we see large lotto jackpots, but what would you do with that money?  Everyone has a quick answer: pay off the mortgage, buy a new car, travel the world, become a philanthropist, retire, the list goes on and on.   But whether it’s the excitement of Powerball or something more common, such as an inheritance or a lawsuit settlement, the most important matter is to calm down, relax, don’t rush and undoubtedly look for professional guidance from a wealth manager to help plot the best course for you and your family.   Before you fly to Dubai for a shopping spree, here are a few things to think about:

  • Will that be cash or credit?   Depending on where this money is coming from, you’ll likely have a few options as to how you’ll be paid.  The most well-known example is the choice many lotto winners instantly face of receiving the jackpot as an annuity over several years or a lump sum all at once.  For some, having that money up front—investable and very spendable—is all that matters while others may prefer the stability of a 20 year annuity.
  • Take it to the slow lane.  You will suddenly have an array of investment opportunities of which you may not have heard before. Some may be well-suited for you, and even lucrative, but many will likely tie up your money in investments you don’t understand and perhaps might not be consistent with your goals.  Others may simply be bad choices.  Issues like this are some of the best reasons to hire a financial advisor, after performing a thorough due diligence process.
  • Don’t publicize your newfound wealth.  Suddenly you are a target!   Be sure to keep track of your funds as ID and financial theft are rampant and you may also become a target for frivolous lawsuits. Retain the services of a qualified estate planning attorney, accountant, and wealth manager to properly organize and maintain records of your documents.
  • I’ve never seen a check that big before in my life!  What should you actually do with the money?  Sure you can put it into the bank but if you do, your funds will likely shrink in value as inflation eats away at your buying power.  After your windfall you may no longer have a need to be ‘aggressive’ with your allocation but this will ultimately depend on you and how comfortable you are with risk.  When some of the emotion of the windfall has dissipated, sit down and devise an investment strategy that takes into account your goals and aspirations.  The intended investment strategy should be incorporated into a written Investment Policy Statement (IPS).  This strategy, which should include diversification of assets, should be adhered to through good times and bad times and not subject to changes based upon emotions!!  Do not “put all of your eggs in one basket”!
  • A cruise around the world certainly sounds nice.  Ah yes, the best part of that windfall…what comes next in your life?  Some people return to their jobs as if nothing had ever changed while others retire and live comfortably for the rest of their lives.  You’ll need to sit down and iron out your goals, both financial and otherwise, and see how best that big check can be put to work making your dreams and goals come true.
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