20-year-old lotto winner refused $1M in cash and chose $1,000/week for life.

I think it was a smart move. Most anyone who suddenly has a bunch of money would of course want to invest it. But they’d go buy the big nice house first and the new cars and before long there’s nothing left to invest. Plus all you’re friends are suddenly down on there luck needing loans.

I remember a story on the news about a young black lady that won a bunch of money. Bought a really nice house in a nice neighborhood, sent her kids to a really good school. Unfortunately none of her neighbors liked her or wanted her around and the kids hated the school they didn’t fit into. Plus her old boyfriends and family all needed money and in just a few years it was all gone. Would have been much smarter to take a weekly payment.

 

Lump sum will compound, $1000 a week will be spent and she’ll be living g check to check

 

When you look at what $1000 would buy 20 years ago compared to now. In another 20 years it might take $1000 to buy a weeks groceries for a family of four.
I would take the lump sum and invest it myself.

 

Take the lump sum, split it across multiple interest bearing accounts(credit unions can be your friend if done right). Pay off bills,make sure to pay Uncle Sam a little extra to reduce the tax liability.

 

I was going to say something similar to with an added bonus, of course we have the advantage of years experience to decide, why I'd take the $1 000 000 up front say you could buy a home for around $400 000 invest the other $600 000 in interest bearing deposits, bonds, and shares and still remain working would be a much better option, $600 000 at 5% is $30 000 per year x 50 = $1 500 000, plus the home appreciating in value over those 50 years. The $1000 per week option I'm assuming she is not going to work again. It would also be a good option for someone that does not know how to invest money and would spend it all quickly.

 

Personally I'd pay off the mortgage we have already then invest the leftover cash. That'd be almost $900,000 to keep & invest. My 20 year old pickup and the wife's 13 year old car are all paid for and we're both fine with what we have there.

I was thinking more of in the lady who won the prize money being her shoes. She's 20 and probably doesn't have a home. If she wouldve taken the lump and was smart she would've paid off whatever car she has, as long as it's decent, and pass on splurging for a new Range Rover. I would also hope she'd find a nice home somewhere for under $300,000 then invest the rest. But she chose the path she chose with the $1,000 a week. Hopefully she doesn't just blow all the money but more often than not that's how these stories end.