Expert advice for lottery winners and their newfound millions
Can you imagine winning a massive 9 digit jackpot - what do you do with it all?
Ask any person and they will give you a list of all the fantastic things they would buy for themselves. And why not? Well certainly it’s your decision on how to spend it, but perhaps you should also seek advice on how to hold on to it. Sitting in the lap of luxury is great, staying there is much better though, so here are some tips on what to do with your new fortune by financial experts.
Don’t tell the Family and friends
It’s only natural that if you just discovered that you won a ridiculous amount of money, you would want to scream your joy from the rooftops right before calling a list of loved ones(starting from Mum and Dad obviously). But some friends and family might get a little too chummy and ask for a little “help” with a new car or a new house, and you being the new “Mr. Moneybags” of the family, might be only too happy to help. Well, financial advisors say that one of the first things we need to learn(if we don’t already know), is to say “No”. The rule here is simple: Only tell the people that you trust and know will not change how they treat you.
You’ve never had more than 6 figures in your bank account, now you suddenly have up to 9 figures and you think you know exactly how to make that money last for generations.
It’s ok, and nobody wakes up with that kind of knowledge. People go to university to become wealth managers or financial advisors, and you definitely need one if you win a big lottery.
Wealth managers are trained to help you manage your new vast sums of money in a way that allows you to live in luxury and still be covered for the rest of your life. So make sure you get one that helps you make a plan for your newfound wealth and how to hold onto it, including how to pass it on to your loved ones without putting them through a storm of paperwork.
A 14-bedroom mansion for a family of 5 (the 5 include the dog)
Mansions and palaces filled with gold-lined everything, a different sports car for every day of the week and a special tap in the kitchen that only pours champagne. It all sounds nice doesn’t it, and it would be silly not to call it that, but the maintenance cost has the opposite effect when the bill arrives. Before buying things like a boat, a new pool or a sports car, you should know their annual costs. Have you seen how much the insurance on a new Ferrari costs? Bottom line: Upgrading your home or trading up your lifestyle is fine, just make sure that the upkeep is also well within your means to live.
Winning the lottery doesn’t make you an angel investor
The allure of being the one to call the shots at the head of a big boardroom table is a sexy position to be in, and we’d all love to be the person that has the power to make the call on million-dollar business decisions. The reality though is that, if you haven’t earned your way there, then you probably aren’t knowledgeable enough to make those decisions. So whatever you do, don’t let someone else talk you into investing your winnings into a pipe dream that will get them the corner office and you waiting for a dividend that never comes. Investing money into a business should be handled by qualified and knowledgeable people that you can hire. It makes more sense to get advice from someone that is ethically responsible to help you because it’s their job, rather than a distant relative that believed the Sony Zoom would win over iPod fans in 2006 (if they were wrong then, they’re probably wrong now).
Financial advisors suggest the first thing that you should do after you claim your winnings is stop yourself from making big purchases or spending sprees for 1 to 2 weeks. This is the easiest thing to do because it means you just keep living life as it currently is, you just have a few extra zeros in your bank account. It can also be the hardest thing to do, because how do you win an insane amount of money and not go on a crazy shopping spree with your bestie? The reason is simple, in 1 to 2 weeks, the euphoria of the win would have calmed down, and you would have had enough time to think about what you could really do with your winnings. So, take 2 weeks to really think about what you want and need, and this way, you‘ll also have plenty of time to go see that financial advisor/wealth manager we talked about earlier.
If you read this list before winning a lottery, then you’re already prepared and all that's left to do is to place a bet on one of our awesome lotteries. Maybe the next time you refer to this list, you’ll be celebrating a newly overflowing bank account and wondering what to do next.