Have you ever thought about what to do when you win the lottery?
You won the lottery! Yee-Haa! You dance around the room, screaming loudly at the top of your lungs. You crack open a bottle of bubbly and ring everyone and tell them. Or.. maybe..tell no-one. Plan to give some of it away? Or better still, give none of it away.
First you will need to decide how you want to receive your winnings and then, (fun part) you will need to decide how you want to spend it.
Some lotteries give you the option of choosing between collecting all the winnings straight away and receiving one lump sum or collecting more money but over a longer period. For instance, if the jackpot was 20 million, would you pocket the whole 20 million today or would you prefer 5 million every year for 5 years (25 million total in 5 years)?
It may be better to take the lump sum. If the lottery is not tax free, you will be paying the taxman a lot more of your cash if interest rates climb.
Spend, spend, and spend. You must have a plan before you hit the shops. Many lottery winners end up broke because they never had any spending plan or basic money management skills.
At this point, it could be a good idea to hire a financial adviser. But do your research first.
Construct a list of “Important questions to ask a prospective financial adviser” and interview as many as you can.
Ask about who they have advised, how they get paid, and speak to their previous clients.
Buy some investments. Buy assets. Assets are stuff that go up in value. Real estate always seems to have stood the test of time. Stocks or shares are also a good bet if you have good advisors.
This way, by investing, after you’ve booked 3 trips to Mars for yourself, bought 8 Lamborghinis plus a villa for each of your friends and cleaned out Tiffany’s and a few of their competitors, you’ll still have the tenanted homes that you bought in the early days to fall back on. So now you know what to do when you win the lottery.