If you won the powerball what would you do?

[Miami Vice]

I worked for Smith Barney in college, and my first call would be to a connected whale that I used to work with. He'd know the right attorney.

[columbia]

So....in excess of 6 figures?

[tifosi77]

I suppose a lottery ticket is like a bearer bond, right?

I'd be terrified to win. Instant target for kidnapping.

That's why you immediately sign the ticket and take a photo of yourself with it.

[Tomas]

Pennsylvania: No State Tax on Lottery Prizes!
Your average net per year: $37,500,000
After 30 payments: $1,125,000,000
Lump - Your net payout: $697,500,000

https://www.usamega.com/powerball-jackpot.asp

Handy website to help everyone's decision making process.

So the present value of what you would receive in 30 years if you chose the annuity is $463,485,104.46 at a discount rate of 3%.

Yes. Annuity is for stupid heads.

Yep. It quite surprises me how many people (luckily not on this forum) don't see how bad the annuity option is compared to the lump sum.
Even a bigger pet peeve - how many people irrationally say "I'd use my winnings to pay off my mortgage debt."

[Sam's Drunk Dog]

You wouldn't pay off your mortgage?

[MrKennethTKangaroo]

So....in excess of 6 figures?

well

[llipgh2]

This is very petty, but I'd be ticked if a Canadian won it.

They don't sell Powerball in Canada, but they've been crossing the border and going online to get tickets.

Damn Canucks...

[Tomas]

You wouldn't pay off your mortgage?

ABSOLUTELY NOT (assuming that I plan to continue living in the house - which probably would not be the case, but still...) Precisely for the same reason you showed the annuity option was bad, because it earned a meager rate of 3%.

Assuming you have a long-term rate of, say, 4%, and you are subject to tax rate of 25% (just to make the calculation easy), you, too, are paying a rate of the SAME 3% (4% less the tax shield (4%*25% = 1%)) on your mortgage. Cancelling the mortgage simply means that you use your present money to wipe out an annuity of payments that earn the same meager rate of 3% for the life of the mortgage.

If you continue paying the mortgage, but invest the excess cash you currently own in pretty much anything, you have 99.9% chance your personal investment will beat the 3% you'd be implicitly earning if you give up today's cash to cancel the mortgage annuity.

[shmenguin]

You wouldn't pay off your mortgage?

ABSOLUTELY NOT (assuming that I plan to continue living in the house - which probably would not be the case, but still...) Precisely for the same reason you showed the annuity option was bad, because it earned a meager rate of 3%.

Assuming you have a long-term rate of, say, 4%, and you are subject to tax rate of 25% (just to make the calculation easy), you, too, are paying a rate of the SAME 3% (4% less the tax shield (4%*25% = 1%)) on your mortgage. Cancelling the mortgage simply means that you use your present money to wipe out an annuity of payments that earn the same meager rate of 3% for the life of the mortgage.

If you continue paying the mortgage, but invest the excess cash you currently own in pretty much anything, you have 99.9% chance your personal investment will beat the 3% you'd be implicitly earning if you give up today's cash to cancel the mortgage annuity.

my mortgage rate is 5%. i will not get a 6+% ROI on whatever i invest in - partially by choice. i'm paying off that stupid house day 1.

also...most people have a home worth what 200-400K? the money you're talking about saving here is an amount i would wipe my butt with if i had half a billion in the bank. so regardless of my mortgage rate, i'm paying off that stupid house day 1. because it would make me happy.

[MR25]

I'd claim my winnings by proxy. Privacy is nice, but everybody wondering who won would be a really top level troll.

The news media would still find out. There was a situation like that that happened a few years ago. Can't find the story now, but I know I posted it somewhere (probably on LGP). Dude claimed it anonymously and the AP filed for his name and published it under the freedom of information act.

[Tomas]

You wouldn't pay off your mortgage?

ABSOLUTELY NOT (assuming that I plan to continue living in the house - which probably would not be the case, but still...) Precisely for the same reason you showed the annuity option was bad, because it earned a meager rate of 3%.

Assuming you have a long-term rate of, say, 4%, and you are subject to tax rate of 25% (just to make the calculation easy), you, too, are paying a rate of the SAME 3% (4% less the tax shield (4%*25% = 1%)) on your mortgage. Cancelling the mortgage simply means that you use your present money to wipe out an annuity of payments that earn the same meager rate of 3% for the life of the mortgage.

If you continue paying the mortgage, but invest the excess cash you currently own in pretty much anything, you have 99.9% chance your personal investment will beat the 3% you'd be implicitly earning if you give up today's cash to cancel the mortgage annuity.

my mortgage rate is 5%. i will not get a 6+% ROI on whatever i invest in - partially by choice. i'm paying off that stupid house day 1.

also...most people have a home worth what 200-400K? the money you're talking about saving here is an amount i would wipe my butt with if i had half a billion in the bank. so regardless of my mortgage rate, i'm paying off that stupid house day 1. because it would make me happy.

If your mortgage rate is 5%, you are paying at best 4% rate on your mortgage after tax (assuming your tax rate is at least 20%). Now, there has not been any 30-year period in the history of the United States (and that DOES apply for periods including the Great Depression as well) when the average rate for any 30-year investment in large cap stocks (think S&P 500) would be less than 7.97% per year (if my calculations are correct). So, just by putting the money in the stock market, you'd be beating your mortgage rate by at least 4% (but more like 6%, because the average appreciation of stocks runs around 10% per year) every year.

I get that $400K is a small house, so maybe the real correct strategy after you win the powerball should be:
A) selling the current crappy house
B) buying the big mansion in ???? with the maximum possible mortgage amount, while investing the cash in stocks/bonds.

[King Colby]

In a vacuum it would be financially stupid to pay off low interest loans if you have the capital to out earn that interest rate through investments.

HOWEVER when we're talking about tens or hundreds of thousands in the context of 500 million, its pretty insignificant, and may be worth the insignificant financial benefit to not have to worry about your mortgage anymore. Its analogous to paying somebody to cut your grass.

[King Colby]

I have student loans at just over 3% and owe about 45,000. I'd rather just be done with them then try to figure out how i can invest at a rate of return greater than 3% such that i maybe net $3,000 or .0006 percent of my winnings...

[Beveridge]

I'd pay off my mortgage in person, with pennies. Haul it in by the truck loads and smoke a stogie while I watch the bank count it up.

[King Colby]

Granted id be paying someone to manage all that for me anyway... the first two people id call after my wife are a lawyer and a financial advisor... i wouldnt even tell my family until after i met with those two persons

[Tomas]

I have student loans at just over 3% and owe about 45,000. I'd rather just be done with them then try to figure out how i can invest at a rate of return greater than 3% such that i maybe net $3,000 or .0006 percent of my winnings...

Would not you be figuring out where to invest the rest of your millions anyway? And aren't your current loan, mortgage, etc. payment just automatic electronic deductions? (I guess I'd be that billionaire who still picks up nickels from the floor! )

[Gabe]

Things more likely to happen than winning powerball

• Struck by lightning, while drowning (1 in 183 million)
  Killed by an asteroid strike (1 in 700,000)
  Have an IQ of 190 or greater (1 in 107 million)
  Attacked by a shark (1 in 11.5 million)
  Elected President of the United States (1 in 10 million)
  Getting struck by lightning (1 in 164,968)
  Being drafted by an NBA team (1 in 6.8 million)
  Becoming a movie star (1 in 1.5 million)
  Dating a supermodel (1 in 88,000)
  Being killed by a vending machine (1 in 112 million)

http://www.thedenverchannel.com/money/a ... ll-drawing

the president statistic is dubious. lets say life expectancy on average is 80 years and there is a presidential election every 4 years. You are only actually eligible for the presidency for 55 of those years or at best 14 elections due to age restrictions. With 300 million US citizens, that would put you at an odds of one in 21 million. Curious how they calculated these.

[Kaiser]

If i suddenly had $700 million, i wouldnt give a rats f*** what happened to a mortgage

[King Colby]

I have student loans at just over 3% and owe about 45,000. I'd rather just be done with them then try to figure out how i can invest at a rate of return greater than 3% such that i maybe net $3,000 or .0006 percent of my winnings...

Would not you be figuring out where to invest the rest of your millions anyway? And aren't your current loan, mortgage, etc. payment just automatic electronic deductions? (I guess I'd be that billionaire who still picks up nickels from the floor! )

Trust me, youre not wrong. But again my low interest debt against 500M is akin to throwing away $20 on something stupid today.

There is some value in peace of mind i guess. Which i why i still am hammering out my loans above and beyond the minimum monthly payment.

[tifosi77]

I'd claim my winnings by proxy. Privacy is nice, but everybody wondering who won would be a really top level troll.

The news media would still find out. There was a situation like that that happened a few years ago. Can't find the story now, but I know I posted it somewhere (probably on LGP). Dude claimed it anonymously and the AP filed for his name and published it under the freedom of information act.

I think there are only half a dozen states that allow lottery winners to remain completely anonymous.

[Tomas]

Things more likely to happen than winning powerball

• Struck by lightning, while drowning (1 in 183 million)
  Killed by an asteroid strike (1 in 700,000)
  Have an IQ of 190 or greater (1 in 107 million)
  Attacked by a shark (1 in 11.5 million)
  Elected President of the United States (1 in 10 million)
  Getting struck by lightning (1 in 164,968)
  Being drafted by an NBA team (1 in 6.8 million)
  Becoming a movie star (1 in 1.5 million)
  Dating a supermodel (1 in 88,000)
  Being killed by a vending machine (1 in 112 million)

http://www.thedenverchannel.com/money/a ... ll-drawing

the president statistic is dubious. lets say life expectancy on average is 80 years and there is a presidential election every 4 years. You are only actually eligible for the presidency for 55 of those years or at best 14 elections due to age restrictions. With 300 million US citizens, that would put you at an odds of one in 21 million. Curious how they calculated these.

It is absolutely not surprising that the odds of becoming the President are greater than your 1:21M. I don't know how "scientific" the 1:10M estimate is, but if nothing else:
- not every US citizen can become the President (me, Ted Cruz,.. )
- even more importantly, not every eligible US citizen *wants* to be the US President

[Craig]

Id pay off my mortgage so i didnt have to deal with it any more. The purpose of winning the lottery is to not have to think about money anymore.

[Gabe]

Things more likely to happen than winning powerball

• Struck by lightning, while drowning (1 in 183 million)
  Killed by an asteroid strike (1 in 700,000)
  Have an IQ of 190 or greater (1 in 107 million)
  Attacked by a shark (1 in 11.5 million)
  Elected President of the United States (1 in 10 million)
  Getting struck by lightning (1 in 164,968)
  Being drafted by an NBA team (1 in 6.8 million)
  Becoming a movie star (1 in 1.5 million)
  Dating a supermodel (1 in 88,000)
  Being killed by a vending machine (1 in 112 million)

http://www.thedenverchannel.com/money/a ... ll-drawing

the president statistic is dubious. lets say life expectancy on average is 80 years and there is a presidential election every 4 years. You are only actually eligible for the presidency for 55 of those years or at best 14 elections due to age restrictions. With 300 million US citizens, that would put you at an odds of one in 21 million. Curious how they calculated these.

It is absolutely not surprising that the odds of becoming the President are greater than your 1:21M. I don't know how "scientific" the 1:10M estimate is, but if nothing else:
- not every US citizen can become the President (me, Ted Cruz,.. )
- even more importantly, not every eligible US citizen *wants* to be the US President

I hate ugly data that gets quoted as fact. You'd also have to discount felons that have not had their civil rights restored. I wonder what % of citizens fail the "natural born" test?

[willeyeam]

While tomas is definitely correct, I think the immateriality of say 200K out of 600 million would make it virtually meaningless

[Tomas]

I hate ugly data that gets quoted as fact. ....I wonder what % of citizens fail the "natural born" test?

I, every member of my family but my daughter, pretty much everybody I work with,...

So by extrapolating my personal experience - exactly 235 million! You can quote that!