What would you do with $500 million in lottery winnings?

[QuarterMillionMan]

With $500 million the problem of making money is gone at that point. Now the problem of how to spend it all arises. Investing would be a none issue for me with that kind of money. Going broke would not happen with $500 million.

[Smallsteps]

It is a hard question since I am sure many items I have not considered would pop up.
Security is an issue so I would want those things in place and collect anonymously if possible.
Besides friends and family coming out of the wood work so can potential money managers other possible employees and even Charities. I do not even think that those charity navigator sites do enough to expose those charities who do little but line their administrators pockets etc.

[corn18]

As i thought about it, I might first want to use the earnings to max out my IRA.

You could buy the entire haircut business you own franchises in.

[MooseBucks]

I’d probably blow a couple million on a beach house, boat & farm. Set up a trust where I’d need some sort of sign off to access over a certain % of money. I certainly don’t have a spending problem now but I’ve read far too many stories of people blowing their winnings. It also makes it much easier to say no when people come asking for $$$.

[disneysteve]

As i thought about it, I might first want to use the earnings to max out my IRA.

Except you couldn't do that with the lottery winnings. It has to be earned income.

[disneysteve]

As much as these conversations always pop up when there's a huge jackpot on the line, the reality is that most people don't have the slightest clue what to do with that kind of money.

I've seen them interview people in line to buy tickets. When the reporter asks what they'll do if they win, they say the typical stuff - new house, new car, take a cruise, etc. So the stuff they list might cost $1 million total. That's great, but if, as TH suggests, you could generate 450K/MONTH, what do you do after the first 3 months once you've bought all the big stuff that you want?

We spent $20,000 on travel last year. Even if we multiplied that 10-fold, that's still only 200K/year, less than 1/2 of one month's worth of income from this prize. Most of us can't begin to conceive how much money we're talking about here.

[TexasHusker]

You could buy the entire haircut business you own franchises in.

Yes but things change. What happens if everyone starts using flowbees or goes completely bald from the new EPA regs?

[TexasHusker]

Except you couldn't do that with the lottery winnings. It has to be earned income.

Good morn’n to you too, Mr. Sunshine !

[MooseBucks]

We spent $20,000 on travel last year. Even if we multiplied that 10-fold, that's still only 200K/year, less than 1/2 of one month's worth of income from this prize. Most of us can't begin to conceive how much money we're talking about here.

I think it takes a year or two to get used to but after that most people don’t have a problem spending the $$$.

I read a recent article about Johnny Depp where he was spending 1-2mill month and was insulted that they said he was only spending ~40k/mo on wine.

[disneysteve]

I think it takes a year or two to get used to but after that most people don’t have a problem spending the $$$.

I read a recent article about Johnny Depp where he was spending 1-2mill month and was insulted that they said he was only spending ~40k/mo on wine.

I suppose, but like I said, most of us just can't conceive of how much money this is and what spending it would entail.

[~bs]

which is why if you did win, you should retain an attorney and cpa familiar with such matters.

[greenskeeper]

I would spend 30 million in 30 days and end up with 300 million

[amastewa93]

Pay taxes on the money, obviously. And take what's left to do the following:

1. Pay off debt
2. Pay for a home in cash
3. Max out my IRA
4. Travel

I'm 25 - so I'm not 100% sure whether I'd take the lump sum or the installments. My instinct is to take the lump sum but I'm sure there are a million valid reasons to take installments. What are you guys' arguments for one or the other?

[disneysteve]

I'm sure there are a million valid reasons to take installments. What are you guys' arguments for one or the other?

I want the money in MY control.

That said, when my daughter was awarded a legal settlement years ago, we had the option of a lump sum or an annuity. We chose the annuity because we did not want her getting a large amount of money the day she turned 18. We felt it was much more reasonable for her to get a monthly check for the rest of her life. It's not a big amount but it's big enough that she's been able to keep her student loan debt to a minimum and once that is repaid, she'll have a nice little extra amount each month to supplement her income.

[TexasHusker]

I second Steve. If you are getting paid annuity-style, the payout is only as secure as the payer.

Many folks have found this out the hard way over the years, when their annuity company files for bankruptcy. Oops!