Lump sum or payments

[HarryBalzac]

If you take the lump sum you let the multi-state lottery set the discount rate applied to the future cash flows. That's like giving complete control to a monopoly.

If you take the annual payments and shop that same trade with major banks you bring competition into play and get a better rate, which translates into a bigger pile of cash. Think JG Wentworth late night ads only with the structured finance arm of a highly rated bank.

Granted, if you're the SOB who just won that extra may not mean much, but the smart play is shop that trade in the market.

[TexasRiley]

Lump some life is short fuck payments

[bigstickdave6969]

Depends? If you are not good with managing $ take payments so you will have cash flowing in every year. Too many people end up broke after taking the lump sum.

Personally I would probably take the lump sum and conservatively invest it to live the the income it would generate.

[Slitlikr]

If you take the lump sum you let the multi-state lottery set the discount rate applied to the future cash flows. That's like giving complete control to a monopoly.

If you take the annual payments and shop that same trade with major banks you bring competition into play and get a better rate, which translates into a bigger pile of cash. Think JG Wentworth late night ads only with the structured finance arm of a highly rated bank.

Granted, if you're the SOB who just won that extra may not mean much, but the smart play is shop that trade in the market.

Brilliant!
Never thought of that angle.

[Max Zorin]

Sounds confusing Balzac-however, if the lottery winnings are real time and it’s October 24th, best bet would take the lump sum and invest in real estate...or diamonds.

[Bigwill832]

Lump sum. You never know when you're gonna go. And then you can what if they state goes bust and renegs on the money. And I recall reading that of you die, it's done. It doesn't pass on to your family.

[bb1961]

Incorrect my sister won 55 mil 10 yrs ago and passed away 7 yrs ago and my brother in law receives annual payments still

[Jack.argus]

Mathematically you are better off taking the annual payments mainly for two reasons. 1. The lump sum payments are discounted severely, 9% at current LIBOR rates. 2. You defer taxes on all of the future payments, if you take the lump sum, all of taxes are taken out at the current rate.

Not to be a party pooper, like the old adage says, lotteries are a tax on people bad at math.

[bb1961]

The lottery is the only voluntary tax on gullible people in the world!!

[Bigwill832]

Interesting. I wonder, did it count as part of her estate? Did he have to pay the death tax or does he have to continue paying? I'm curious about that now.

[poohbear]

I would take annual payments setup in a trust account. After a couple of years worth of payments, living off of the interest generated would not be a problem for me. Setting it up as a trust will insure my family would get the entire amount if I happened to die.

[tbone2u]

Take the lump sum. The last check you need to write should go to the undertaker and it should bounce.