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What I Will Do With My $586 Million
The MegaMillions lottery jackpot is $586 million. That’s, um, a lot of money, even after I go through the mental process, like a good conservative, of calculating what the all-cash payout might be (roughly $250-$300 million) and the cap gains taxes (let’s say 30%?) netting me (back of the envelope) $200ish million.
So, really, the only question is this: what should I spend my $200 million on?
Candy, probably.
I don’t mean actual candy, I mean metaphorical candy. Grown-up candy: things like Paris apartments in the 7th arrondissment, a place on Hobe Sound, stuff like that. Maybe I’ll invest in a center-right web-based conversation site and…..
Oh, wait.
Look, I know the odds of winning this thing aren’t great. (I also know that I am going to win it.) But it’s fun, in a limited and highly-curtailed way, to daydream a bit, even though we’re all smart here at Ricochet and we all know that these lottery things are, basically, scams. “Idiot taxes,” a friend of mine calls them. But if you don’t have $200 million and there’s a way — even a statistically impossible way — to get $200 million, it’s only natural to spend a few moments deciding between the rue de Varenne and the rue du Bac.
Here’s what I’d like to know, though: if you do have $200 million, do you still daydream about getting another $200 million? According to Tom Corely, the author of Rich Habits: The Daily Success Habits of Rich Individuals, you do not.
What do rich people do? They get up early, they eat right, they make to-do lists, and they set long-term goals. From Yahoo Finance:
Early RisersCorley found that rich folks often take advantage of those wee morning hours. Specifically, 44% wake up three hours before their 9-to-5 job. In those hours they focus on self improvement, reading educational material, like trade journals or industry blogs. They’ll squeeze in a workout, too, which Corley says leads to a more productive day at work.
Keep a Running List of TasksOnce they reach their offices, the wealthy don’t waste time. Most maintain a daily to-do list and check off 70% of their tasks each day. And they’re not just obsessed with short-term plans. Seventy percent of the wealthy surveyed set long-term goals, as well.
No Long LunchesTaking a long, leisurely lunch isn’t a wealthy habit, either. Instead, 55% network, wheel and deal between bites.
Calorie CountingSpeaking of eating, rich folks are big calorie counters. Corley found most wealthy people limit alcoholic consumption and keep junk food snacks to just 300 calories per day, not just so that they can fit into their skinny jeans. “Wealthy people are healthy people. To wealthy people being healthy is about making more money,” says Corley.
No GossipingConsider this before spreading the latest workplace rumors: 79% of low-income people admit to gossiping, compared with just 6% of wealthy individuals.
In other words, they focus on the life they’re living, not the life they’ll have if they win MegaMillions, which they know isn’t going to happen. Is there a conservative message in this? We already know that to keep out of poverty, you really only have to do three things: finish high school, have children in wedlock, and get (and stay) married. If you do all of those things in addition to the items above, maybe you won’t need to win the lottery.
I’m buying a ticket anyway.
Also, Corley adds one more thing to his list:
Limited InternetFinally, when it’s time to punch out at the end of the day, how do you unwind? Head to the bar? Veg out in front of the TV? While most wealthy folks reported activities such as networking, volunteering and socializing, Corley found a majority of those struggling with their finances spent more than an hour on recreational Internet use, and were twice as likely to hop on Facebook every day.
Ahem. Is this a good time to remind you to join Ricochet?
Published in General
5 minutes? I’ve spent the past hour pricing partial-ownership jet options. ·2 hours ago
Assuming you did this on the Internet, you would have improved your wealth odds by volunteering…
My biggest problem with a state-run lottery is the message it sends to its citizens: You can get something fantastic without ever working hard for it. That is not a philosophy a republic should be promoting to its citizenry.
That said – my wife and several of her teacher friends pool a couple bucks each every week on lottery tickets. And if they ever win – I’ll be too busy spending the money to chat with you people!
If I were you Rob I’d buy the charter ownership for a jet, hire a top-notch security team, and find a non-descript place to hide out for at least six months. You can resume your life once people have forgotten you won or have moved on.
Bereket – reference my earlier comment. I already solved that riddle.
“So, really, the only question is this: what should I spend my $200 million on?
Candy, probably.
I don’t mean actual candy, I mean metaphorical candy. Grown-up candy: things like Paris apartments in the 7th arrondissment, a place on Hobe Sound, stuff like that. Maybe I’ll invest in a center-right web-based conversation site and…..”
Hobe sound?? Are you kidding me? So pedestrian. I’m glad to be away from S.Florida.
Better plan on only $175 million to spend. ·4 hours ago
I’m thinking $150 million max. The cash payout usually starts out at less than half of the stated jackpot. Then his combined effective CA and US tax rate will be, say, 48%.
$586,000,000 x 48% (cash) x 52% (after-tax) = $146 mil take-home.
There goes his $54 mil Paris pad.
[Edit: the news is better for Rob and those of you in the Golden State. CA doesn’t tax lottery winnings at either the state or the local level.]
First my wife and I quit work. Second, my kids quit work, and the family travels around for awhile. After that several things; give a large donation to Backwater Legacies, who is doing wonderful things for youth development. Sponsor a FIRST Robotics Team. Finally, build a great garage / shop and start tinkering. Build some of those inventions that have been floating around in my head for decades.
Some of us will buy a single ticket at the cost of loose change, and relax a bit as we spend our imaginary money. No harm in it.
But if you drop $200 on 2 tickets to the opera, you’re cultured? Or a hundred bucks for a ballgame you’re sporting? Or fifty bucks for a night out at the movies you’re romantic?
It’s just a difference in entertainment choices. No idiots involved.
Though anyone who would pay for an opera ticket…just sayin’.
If it’s idiotic to spend $50, it’s idiotic to spend $1. As WC Fields (or was it Churchill?) said, “We’ve established what you are. Now we’re just haggling over the price.”
Money really is evil, though no one believes it, and one ever heeds the warning. I’ve seen a few farmers’ estates get divvied up by families, and it ain’t pretty.
You don’t want that much money, and you need to get rid of the bulk of it as fast as you can. It’s not just the helots, of course, you’ll find helots appearing in your own family.
Imagine for a moment what would happen if you didn’t split any or very much of it with the siblings of your generation.
Why allow resentment to fester?
Evil.
If you think there won’t automatically be resentment, that they’d shrug it off, you don’t understand humans any better than you understand money.
You have to split it evenly with them. In my case that’s two brothers on my side and one brother on my wife’s. If after tax prize is $200 million, that means we get $50 mil. You don’t want your siblings being overly grateful to you either–splitting it up evenly gives them the chance to think that’s what they would have done too, had it been them.
Then my kids get their college paid for. Any gift beyond that will harm them irreparably. Trust fund is a good idea, maybe they get some when they turn 30, but not so much that they could live off it the rest of their lives. Just a few hundred thousand at the very most.
Best time of my life was when I struck out on my own with just a few dollars in my jeans. I didn’t know a damn thing about myself or life in general until I did that.
I wouldn’t rob my kids of that.
Luckily, I’m not afraid of my boys resenting me. You need to resent your parents some or you’d never leave the nest.
After that my wife and I would spend some on an isolated farm somewhere south of the Mason Dixon. Probably Southern Kentucky which is about the prettiest place on earth (with changing seasons, but just enough to make it interesting. Fairly warm the rest of the time). Start a little business we’ve always dreamed of starting.
The rest goes to charity. And it might be fun to buy a politician or two, maybe even form a little PAC. Join the Article V Convention Movement. That sort of thing.
Well, that’s what I’D do, for what it’s worth.
With a sudden influx of money, I’d definitely invest in some business opportunities.
Occasionally, you will see some football player put his millions to good work. I think John Elway of the Denver Broncos has a chain of car dealerships.
I’d have the greatest weekend in the history of Las Vegas.
I’d give all the winnings to Ricochet. Right…
The point of playing the lottery, maybe. The point of the lottery is revenue for states, states that run PSA ads hawking the lottery but remind us to “please play responsibly”.
Right up there with their running liquor stores (in some states) and also telling us to drink responsibly. Hey, if there were heroin stores, would we also be reminded to shoot up responsibly?
Having said that, don’t forget that money you owe me, Rob. ·6 minutes ago
I agree with Frank. The point of the lottery is not to win (while that would certainly be nice), the point of the lottery is to dream of winning. ·5 hours ago
Oh, and I’d rent the Swedish Bikini Team for a week if I won.
We’d play volleyball.
I don’t know if you meant this in your “might sleep for a week” comment, but lottery winners gain their own set of headaches.
Half billion dollar bank account headaches? May I be afflicted and never recover!
I know what you mean though. It might be different for me because I wouldn’t care about the money so much because I didn’t work for it.
If some went away with bad investments, well I’ve done that with normal money. If some was stolen, I’ve had that happen too. But that was sweat money so it hurt.
I would set myself up nicely with about 5 million. Lots of the rest would be given away in small business grants and interest free loans.
Maybe set up an online/home schooling foundation….
Trusts for the kids are over-rated. Make them work for a living. They’ll be better off for it.
Most of the parents of the kids I went to school with had them.
That’s why “small.”
Reminds me of an episode of Married With Children.
Al Bundy won $1,000.00. Peg Bundy complained about what he might do with it and said, “What’s that Al, 1,000 nights at the nudie bar?” He said, “Nope, just one really good one!”
In looking at it, while one loses some to the time value of money, it can actually be more profitable to not take the cash payout. And besides, at this level, it would be like cashing out a $30M lottery every year for 20 years, so it’s not like it would leave you hurting for money. ·18 hours ago
Edited 18 hours ago
You are such a trusting soul. I would take the cash payout because I just assume future tax rates will skyrocket, gutting the future payments.
At least, that’s what I tell myself. ·18 hours ago
Edited 18 hours ago
One of life’s great tragedies is that so many people’s lives are ruined by sudden wealth …… while I, who could handle it, never get the chance.
If you think about it analytically, lottery investment is just common sense under the right circumstances. In terms of alternative uses foregone, loss of a couple of bucks might be utterly trivial, essentially zero in its impact on your life. Winning even a modest lottery payout — netting you a few tens of millions, say — can totally reconfigure your existance, an essentially infinite return. Given that your odds of winning are only infinitesimally greater than zero, the infinite return on a zero investment means they are still in your favor.
And that’s what I tell myself.
And that’s what I tell myself. ·14 minutes ago
Let’s really think about it analytically:
For those who play consistently, let’s say almost every weekday, a couple of bucks per day equates to about $500 per year. The expected value of each ticket is nonzero, however, it is exceedingly close to zero. The net cash outflow over 20 years would be $10,000, assuming no winnings, and slightly less than $10,000 assuming occasional, minor jackpots. Now, imagine this player investing $2 per weekday (~$500 per year) in an S&P Index fund over 20 years. Assuming a return of 7%, the person would have about $22,000 at the end of the period.
Is this disparity of result utterly trival?
From today’sBusiness Insider : your after tax lump sum take would be nearly $253,000, except you live in CA, so expect to get al little less – say 3% of the lump sum or only $241 million. If I were you I’d move to NH with PJ O’Rourke and Mark Styne before taking the payout, add another 4% at $265,000. We are all, as you know, cash basis taxpayers.
Money quote: This week’s jackpot stands at $540 million, with the cash option being $389 million. Assuming a winner pays 35 percent of income tax, that comes to $252,850,000. Putting that into a super conservative portfolio—without touching the principal—that returns around 3 percent would generate a princely $7,585,500 in a year
Let’s really think about it analytically:
For those who play consistently, let’s say almost every weekday, a couple of bucks per day equates to about $500 per year. The expected value of each ticket is nonzero, however, it isexceedinglyclose to zero. The net cash outflow over 20 years would be $10,000, assuming no winnings, and slightly less than $10,000 assuming occasional, minor jackpots. Now, imagine this player investing $2 per weekday (~$500 per year) in an S&P Index fund over 20 years. Assuming a return of 7%, the person would have about $22,000 at the end of the period.
Is this disparity of result utterly trival?
Let’s think about it realistically. No one is going to set up an S&P Index fund with those funds. The $2/wk will be blown on some other entertainment. That’s why it has an essentially zero impact.
Money quote: This week’s jackpot stands at $540 million, with the cash option being $389 million. Assuming a winner pays 35 percent of income tax, that comes to $252,850,000. Putting that into a super conservative portfolio—without touching the principal—that returns around 3 percent would generate a princely $7,585,500 in a year ·2 minutes ago
Holy Shnikies. 7.5 mil in interest.
Let’s really think about it analytically:
For those who play consistently, let’s say almost every weekday, a couple of bucks per day equates to about $500 per year. The expected value of each ticket is nonzero, however, it isexceedinglyclose to zero. The net cash outflow over 20 years would be $10,000, assuming no winnings, and slightly less than $10,000 assuming occasional, minor jackpots. Now, imagine this player investing $2 per weekday (~$500 per year) in an S&P Index fund over 20 years. Assuming a return of 7%, the person would have about $22,000 at the end of the period.
Is this disparity of result utterly trival?
Let’s think about it realistically. No one is going to set up an S&P Index fund with those funds. The $2/wk will be blown on some other entertainment. That’s why it has an essentially zero impact. ·
Agreed. If not a lottery ticket it would be a doughnut and a fountain coke at the gas station.
How much will I have left after paying my Obamcare penalties and securing DocJay as a better version of Dr. Nick or Dr. Conrad Murray?
That depends on how much you donated to the Obama campaign.
I would arrange for next year’s October Ricochet National Meet-up, this time on the Big Island. All members would be invited, gratis, for a five day deal. The cost: pay your own airfare (scholarships would be available for the needy.) I’d provide rooms for the contributors as well. Our collective goal would be to run up a bar bill bigger than the room tab (that would likely be some $350 per person per night.) I know we could do it! Oh, and there would be a golf tournament and a luau.