Lottery Winnings

Written by James Lyons
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Lottery winnings are usually distributed in two different ways: a lump sum or as an annual annuity. In my opinion, you are crazy if you choose to have your winnings distributed to you over a long period of time. It makes no sense. You could get a lump sum now, invest it conservatively, and double your gross lottery winnings over the same period of time it would take to receive your original winnings.

Americans shell out more than $25 billion a year on lottery tickets, so somebody out there is living large. What would you do if you won the lottery? Would you be ready for the one of the greatest events of your life or would you squander away your new found fortune. To enjoy your jackpot to the fullest, you need to understand how money works.

Lottery Winnings Can Be Deceiving

Winning a million dollar lottery does not make you a millionaire. It just means you're getting taxed on a million dollars. Granted, that's not a bad position to be in. The return on that investment is enviable. However, it's vital to know how you will be taxed if you win that money and what steps you should take to fully exploit such a once in a lifetime event.

It absolutely kills me when I hear about lottery winners collecting their lottery winnings over time via fixed annuities. A dollar twenty years ago was far more valuable than it is today. Twenty years ago, you could go to the movies in New York City for two or three dollars. Today it's at least $10 to see a movie in New York City. Therefore, if you win the lottery, you should know that the winnings that comes into your house in twenty years will be worth much less than the winnings you receive today.


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