The Finest Financial Tips for New Lottery Winners

Financial Tips for New Lottery Winners

The Finest Financial Tips for New Lottery Winners

Winners of enormous lottery jackpots, like the recent Powerball win of $1.6 billion, enjoy wealth beyond their wildest dreams. What does it feel like to look in your bank account and see nine figures? It probably feels like now would be the perfect time to go out and buy a Lamborghini!

Not a bad move. Success, of course, should be celebrated. But that’s not the end of the story, is it? After seeing how miniscule a dent that Lambo made to your newly enlarged bank account (less than a tenth of a percent?!) it’s easy to believe that you’ll never manage to spend all that money, even if you were given two lifetimes.

That’s a dangerous thought, because not only is it easy to blow through hundreds of millions quickly, it’s also more common amongst lotto millionaires than you might think. They start off with a mountain of money and somehow, it’s all gone within a few years. We don’t want that to happen to you, and have prepared a list of tips to keep you and your family rich for generations.

Get Tax Advice

Lottery winners usually get heavily taxed on their win. And while some lotteries have tax-free wins, most don’t. In case you win a lottery of a significant size that is, in fact, taxed, you should hire someone who knows the ins and outs of the tax code in your country. They can help you avoid giving away more than you need to, and keep you compliant while preserving as much of your newly-won cash as possible. Not doing so is also quite risky, because the government is likely to return for that new bank account, and a tax professional can keep them at bay.

Invest

While it may feel weird to take a big chunk of your millions and to immediately spend it on stocks, bonds, or other investment instruments, it’s in your best interest (literally). The interest made on enormous sums is extremely impressive. The average yearly return on the stock market is about 8%, and if you put just $100 million of your Powerball win into stocks, they will net you $8 million a year.

Investing is a stable way to ensure that your money grows over time, protects you against inflation, takes it out of reach of potentially big spenders, and the smartest lottery winners simply invest it all and live off the returns.

Hire a Finance Wizard

A financial advisor can tell you the optimal balance of stocks, bonds, ETFs, commodities and more, for your portfolio, teach you to manage your money responsibly and will act as the voice of reason should you ever want to purchase your own island in Dubai.

Someone with decades of experience in how to keep money safe and profitable at the same time is a person you need on your team. Be sure to do your homework before picking your advisor, as there are several factors you should consider beforehand. These include: the system through which they are paid, (commission, flat rate etc.) how many good testimonials they have, and more.

Build Your Budget

Decide how lavishly you want to live (your financial advisor will help you find a reasonable balance) and then stick to what was decided religiously. If you have no system to stick to, it’s easy to get lost in a whirlpool of spending and end up broke, fast.

By finding a budget that allows you to live well and maintain your money at the same time, you can ensure that even your twilight years – as well as your family’s – are blessed with wealth and security.

Wealth Wizardry Prevents Lawsuits

Unfortunately, the rich are prime targets for those who want to grab the low hanging fruit, be it through a lawsuit, an angry ex who is claiming ownership, or estranged family members who you “owe money to.” These people will want to take a piece of your millions any way they can, and proper financial wizardry from a top advisor can help make it almost impossible for this to happen.

Setting up trusts, private foundations, nonprofit organizations or other financial bodies can tie up your money in ways that still give you access to it, but to you alone.

Write a Will

The nightmare of every lottery winner is to die without enjoying their riches first, and this is often demonstrated by the health binge new millionaires often go on to expand their lifespan (and time spent on perpetual vacation) after their win. What’s worse than dying before you’ve spent enough time in paradise, is to leave no will behind.

If this be the case, almost anyone can contest your intention to leave the money to your family, your spouse or a charity of your choice. Be sure to draw up an airtight will with witnesses present, once you win the lottery, so that the money goes exactly where it’s supposed to when the time comes.

Winning the lottery is a dream. Follow these tips and keep it from turning into a nightmare.

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