Well here with expert advice on this is David Peters Financial Advisor and C. P. A.
David. Thank you so much for joining us.
First of all, what are the actual chances of a person winning the lottery?
Well, they're really, really small. I mean it's one in about 300 million.
So, you know, so your chances of winning are pretty small.
But it's still fun to dream, isn't it? Mm Hmm. It always is.
And are you dreaming already? What would you buy?
Well, I think that if that if it was me,
I I think that probably my number one concern would
be figuring out how to make that money last.
I mean, uh, you know, if you really want money to be
life changing, I mean, we've got to make sure that it lasts over a long period of time.
And so I think that for a lot of folks that have won the lottery in the past,
the place where they have kind of gone wrong is is through overspending.
And so we would want to make sure how to figure out
how to make that money last over a long period of time.
All right, well let's get to it.
What would you say for someone who says, okay, I just want, I don't know.
I need some financial advice. What would you tell them?
Well, I would say one, I would say that they have a they have a very good problem.
Um, but too,
I think that the next thing that I would say
is is how exactly you're gonna take the money.
Uh So you do have the opportunity to take a lump sum or you can
take an annuity which is basically a series of payments over a number of years.
So if you take the annuity,
I think that you know you have a better chance of making that money last.
Um The annuity
If you take that is approximately 17 million per year over 30 years,
whereas if you take the lump sum it's uh after taxes it'll be about $600 million.
So um you know, so the annuity,
if you know spending is going to be an issue I think you know,
taking the annuity is the way to go the other piece.
We gotta watch out for them no matter which option we choose is taxes,
making sure that we have enough set aside for taxes to pay when the time comes.
Yeah, that's so true. Gotta pay Uncle Sam.
But you know,
I know a lot of people worry I don't want to take the
annuity because I'm afraid maybe the lottery will go out of business,
maybe something will happen where you won't get any of your money.
Is that a concern? Should that be a concern?
Well, I mean I would say that the lottery has been around for a long time,
so I don't know that uh that that is necessarily a big concern.
Um But you know, if if that is a concern.
I mean you can take a lump sum that's actually what a lot of people do,
the majority of people do take a lump sum, however,
if you do take an amount that big again, the tax bill is gonna be really, really high.
And so making sure that we have enough set aside
to pay for the taxes when the time comes,
because the person who wins tonight um
won't be actually paying any taxes until probably april 15th
2023 so it's gonna be a bit of time.
So we need to make sure that we're disciplined enough to set that money aside.
I'm gonna get that tax extension, I don't want to pay it in april,
pay it in october All right, But you know what,
there are many stories of lottery winners ending up with
less money than before they even play the lottery.
How can winners avoid blowing all of their money and going bankrupt?
Well, I think that watching your spending and getting into good habits I think is,
is important.
You know, not only if you win the lottery, but if you get a big windfall of any type.
Um One of the things to watch out for is is that a lot of folks, when they,
when they have a big windfall is they will spend
um their money on something big, you know,
so maybe a new house or something like that.
There's nothing wrong with that.
However, you know, the, the issue is is that if you buy a big house,
you also have to pay all the expenses that go along with the big house.
Um, you know, so things like real estate taxes and
the increase in the electric bill,
the increase in insurance and all of those things.
And that's usually the part where people get in trouble is they forget that,
you know, after this big windfall, um, you know,
whether or not they're still gonna be able to afford the things that they just,
that they just bought.
Mm that's a good point there.
And I know a lot of lottery players,
they should watch out for scammers as well because with
buying those homes and everything else you want to buy,
there's a lot of scammers out there, whether you, you know, win or not,
how can players protect themselves against scammers again,
whether they win or not.
Yeah, I mean, you know, the biggest thing is, is just just be cautious on, you know,
kind of things that seem too good to be true and really just go to kind of
trusted sources that does tend to be a big problem when people win the lottery is,
is that they have situations where they have a lot of people pulling at them to,
to try to give them money and so just be careful on that, you know,
don't be too trusting and always be a, you know, a bit skeptical also,
if you're really not sure, you know, ask a somebody who is a professional.
So ask somebody who is a financial professional.
Um, and ask them to help you scrutinize that before you sort of,
okay, now I know another piece of advice a lot of people give is remain secretive.
Keep your identity secret.
Don't tell the world, but is it required that you have to go in for the photo with,
you know,
the whole lottery agency or whatever because I'm just gonna dress up
as an old white woman and no one will know it's me.
Um, so some states actually do require the person to,
to become public at least to a point.
There's other states though that don't,
and so if you are in a state that that doesn't require it.
Um, you know, then then you, you may want to consider not actually going public with,
with the fat that you want.
And so, so, um, I think that, you know, again,
because you have a lot of people pulling at you, um, you know,
advertising that you want to, to the general public can maybe be to your detriment.
I'm not telling nobody. All right.
So what other last minute tips do you have from people playing the lottery tonight?
Uh, you know, it's the chances of winning are pretty small. If you do win.
That's great.
But you know,
make sure that it truly is life changing money and the way that you do that is,
is that you are able to make that money last.
If you can spend less than uh then you made.
Um Then you're gonna have you're gonna have a good financial future for
you no matter how much money you get in your women fall.
Alright now, earlier you gave me uh avoidance answer.
I need to know what David is gonna do with the money if he wins.
I want just want something.
You're gonna buy something fun that we know you're gonna save and budget.
What's the one thing you want to splurge on?
I mean,
I think that for me it would be a vacation
home and probably a beach vacation home at this point.
So,
so but uh you know um I think that that would
be probably my my lottery winnings in terms of the other,
you know, $900 million dollars or whatever.
I'm not sure what I would do with that. Probably probably retire.
All right now. That's the answer.
I like I'm gonna buy a big house for my mama, my daddy, my mother in law, and my family.
And we're gonna stay quiet. Don't tell anybody. All right, David.
Peters financial advisor and C. P. A. Thank you so much for your advice