In today’s show we’ll learn msn.com’s advice about what NOT to do if you win the lottery.
Saturday, a hospital worker in Massachusetts won the Powerball. Her prize: $758.7 million. There is an old adage -- no one should ever have to get rich twice. Those who become filthy rich overnight better have a serious plan in place to protect themselves from going broke.
Imagine how you would feel if you lost a winning lottery ticket. Or what about if someone else takes your winning ticket and then shows up to collect the prize? Fighting over a winning lottery ticket is no simple task, and disputes have arisen over who was the real owner of winning lottery tickets.
In more ways than not, a winning lottery ticket is like the last form of bearer bonds. Whoever shows up with the right paper gets paid. You have to sign and secure that ticket, and you then have to report to the state.
It is sad to report that some lottery winners have ended up being murder victims, and for far less than the massive empire-building jackpots. If you can manage it, and if your state allows it, try to remain anonymous for as long as possible. How you became vastly wealthy will be found out in time anyway. Do not rush out and hurry that process along and jeopardize yourself.
A figure that has been cited in the media is that around 70% of lottery winners end up broke again. Some manage to go broke within a few years. Go see a reputable and visible tax professional and a reputable investment advisor at a top money management firm with a widely recognized company name and a long corporate history. This theme of “reputable and visible” will echo throughout. Do this before you automatically make the decision about a lump sum or annuity option.
There are many ways to invest and to protect that new fortune. Strategies of the extremely wealthy often go way beyond just buying stocks and bonds and letting those investments ride. Having a solid and respectable team of financial advisors and managers from reputable firms will act as your buffer to protect your assets now and in the future. Do you know how to protect your assets against all threats and know exactly how to protect your estate in case you die or become incapacitated?
If you suddenly become filthy rich, it is important to get rid of your old financial obligations and debts. Do this immediately without a second thought. If you feel like “I’m rich and don’t have to pay anymore,” you are already deep into the path of dooming yourself.
Whether you take the lump sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong. For that matter, you should not have a single debt ever again.
If you start buying everything for everyone, chances are high that they might expect that to last forever. The other end of the story is that you do not have to be a cheapskate either. Buying nice things is fun. It can even create a rush for some people. Imagine getting to buy whatever your imagination can think of. Now take a breath for a second. Buying multiple houses and multiple cars will put you on a bad path if you do not avoid impulse buying. Do you really want to be your friends and family personal welfare department?
You already know the big life is heading your way. How could it not be heading your way with all that new money? Still, the temptation to keep buying or accumulating endlessly can wipe you out in a short time. If you go from living a simple life to instantly having the wherewithal to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more and more. Again, the cost of yachts, jets, private islands, mega-mansions, vintage cars, fine art and the rest of the luxury market can burn millions in a very short time.
It may seem silly on the surface that you might need a budget and might need to consider limitations. The harsh reality is that creating and actually living on a budget are not just tasks for the poor and the middle class. The very wealthy, at least those who stay that way, know that even a vast sum of money can vaporize. Major lottery winners generally become wealthier in an instant than everyone they know combined. Without setting limits for yourself and for what you do with others is a recipe for disaster. Again, many lottery winners go broke.
One common theme that has come up with lottery winners who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy. This could expose you to more than just a loss. You could end up with endless liabilities in some cases.
Many lottery winners and others who become filthy rich fall into the trap of thinking that they need to immediately share their newfound wealth with society. It may seem nice to give away vast amounts of cash to charity or to religious institutions. Imagine that you give away that fortunate and a serious crisis arises in your life or your family’s life. You simply gave away all financial means to change it. Rather than giving everything away now, the current charitable trend of the extremely wealthy is to plan for how to give the money away upon death.
Many movie stars, entertainers and athletes live a life of luxury. Lottery money gives a winner the chance to live a life of luxury up with the lucky few. This privilege comes with pitfalls that can make them go broke. Keeping up with the Joneses is bad enough.
There are some people who believe that the rich can do whatever they want without consequences. It is true that the wealthier you get, the more high-class trouble you can find. It is also true that the rich can afford better attorneys and a better legal defense than the rest of us.