The Powerball, the Mega Millions, just hearing their name will get you dreaming. Why is that? Because it’s easy money, and it’s quick money. But it seems that most lottery winners, whether it’s the jackpot or a matter of si figure, go broke. They lose all of their money on trivial things and end up even more broke than before.
Winning the lottery is a very life-changing event; nobody can expect it, because of how low the odds are, and because of how much luck you need to win it. It’s hard to imagine, and even harder to believe if it happens.
So what should you do after you win the lottery?
There are so many things to do after you win the lottery, there’s signing off the back of the ticket with your name after winning. This way, no other person can claim it as his. This way, you’ll be able to protect it.
After signing off the back of the ticket, you still have to go claim your winnings so you no longer have to be the sole responsible for the ticket. After claiming the winnings, the state will also be responsible for the ticket.
After this, you’ll have to make a choice, either take the lump sum or the annuity. And this is a very important decision. If you ever win the jackpot and won $1.6 billion, the state and taxes will take almost half of it.
But if you take the annuity, you’ll receive annuities for 29 years, each year. And will receive all the billion intact without it being decreased by taxes. But why should you choose any one of them?
If you take a lump sum, you’ll be able to have all of your money, at the soonest time, and do whatever you like with it. But if you take the annuity, you’ll only have a few thousands of dollars a year to use.
If you take the lump sum
If you take the lump sum, the first thing you need to do is actually put it in a bank, but not for too long. Then you’ll need to hire financial experts to help you make financial decisions that you will not regret in the future.
Because obviously, winning the lottery doesn’t make you a financial expert or a smart investor, it only makes you rich for a while. But if you manage your money well and make a responsible and wise decision then, you stay rich for as long as you live.
Although a lot of people will advise you to just put your money in a bank and live comfortably, that’s not a very wise plan. Inflation will make your money lose its value over time. And maybe 20 years from now, that half a billion won’t be worth a dime.
And besides, the more you have money on you, and ready for you at any time, the more you’ll be tempted to lose it. So that’s another reason for you to make investing your priority.
The first thing you need to do after hiring financial advisors is to actually go on a small vacation so get clarity. This vacation will help you understand the life you’ll have now and how to make the best decisions possible to keep it the way it is but enhances it further.
A little bit of isolation will help you understand everything better and will help you accept your winnings as yours. Because what happens most of the time, is that winners don’t have time to process what happened, thus they feel undeserving and that the money isn’t theirs. So they go and spend it all on stupid things just to go back to case 0.
How to live off the interest
So, as it has been said, you need to make investing your priority. Because this way you’ll be able to live off the interest and won’t have to think about what to with that money in the bank.
Put your money in a cost index fund
If you’re too afraid of investing your money and feel like you will lose all of it, then there are safer options of investing that will help you get the interest but without the risk. How? Well, you can put your money in a cost index fund. It’ll help you protect your money from the inflation and you’ll see your money rising each month because the bank will be using it and will give you your part of the benefit. Slowly, but surely, your money will keep growing and you won’t have to worry about the risks of losing it all.
Invest in a private property
Investing in property is another safer way to invest your money. Owning property is a great way to save your money and help it grow in the long term. The more property you own the more you’ll be able to leverage them and rent them, thus, you’ll have a monthly income with rent only.
On the long run, the value of those properties will keep growing and growing, so the more you keep them, and the more you buy, the more you’ll have a chance of living off interest and living off rent with them.
Private equity
Private equity investments are not an easy deal; they require money, time and effort. Why is that? Because they require up to 10 years of commitment. All you need to do is pick roughly ten different funds in all different markets and segments and allocate equally to them. With this strategy, and with this long time period, you’ll be able to get back returns that are very important.
Not only will they help you live comfortably, but it will also help you stay focused on one thing which is private equity to make money.
Hedge Funds
Hedge funds are another way to live off the interest, even though few are the hedge funds that have complete exposure to the stock market, a lot of investors keep waiting for a hedge fund portfolio that will outrank the equity market.
Hedge funds are a high-risk business, because of their volatility. So that’s why most investors advise people to only put less than 3% weight on one fund. They recommend diversifying your strategy and not relying on funds only.
In these few last years, hedge funds didn’t perform as well as the equity market, which is why you should consider private equity thoroughly rather than hedge funds, but it wouldn’t hurt to diversify your strategy to lower your risks of losing money.
Real estate
And we’re not only talking about private property, but real estate investments have also both long-term and short-term return which is why it’s a very convenient and attracting strategy. Investing in real estate should include residential properties, but also commercial ones like hotels, warehouses, office buildings, etc…
The great thing you’ll receive off real estate is a sustainable monthly income from rent etc… and you’ll also be able to sustain a portfolio of real estate which value will keep growing over the years and can be resold for billions even.
A lot of millionaires and billionaires became this wealthy just because of real estate. So consider it very well.
These were the main ways to invest your money and live off interest as a lottery winner.What do you guys think? Do you have any other ways to make money and live off interest besides these ones? Leave them in the comment!
