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Powerball up to $1,500,000,000

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Yah, you lose the taxes, but you're losing a lot of potential interest with the annuity I woud think.

I don't know much about it, but you probably are also losing the inflation war, unless the payout is adjusted for the CPI each year, or something like that. Not that CPI is an accurate inflation index, but it is what people seem to use.

Really, it's not had to do this analysis, to determine if you think you are better taking the lump sum or annual payment, if you have all the information. Then you can play with some of your return assumptions and see what happens.

Personally, I'm a bird in hand kind of guy, and wouldn't want to rely on any state or government entity to make payments to me for 20-30 years.

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I believe there is a 4% increase every year. But my main thing with the annuity is that it makes it easier to deal with all that money. And if somehow you screw up and get ripped off....just wait a few months and you're rich again.

My only concern would be if somehow they defaulted on paying me.

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Just back of the envelope, if the annual payout is $50MM per year for 29 years, and inflation is 2.5% per year, by year 29 the payment has a purchasing power of roughly $24MM. You would be losing over half your purchasing power over the payout period, assuming the payment is not inflation adjusted.

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Just back of the envelope, if the annual payout is $50MM per year for 29 years, and inflation is 2.5% per year, by year 29 the payment has a purchasing power of roughly $24MM. You would be losing over half your purchasing power over the payout period, assuming the payment is not inflation adjusted.

I wonder how I would be able to survive on $24 million?

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I wonder how I would be able to survive on $24 million?

Sure. But if you are losing 30% of your future payouts (yrs 1-29) to inflation (assuming the payout is not indexed), it really offsets the loss incurred by taking the upfront payment. And you maintain the upside of investment proceeds for 29 years.

But maybe the payout is indexed. I don't know if it is or isn't.

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With the lump sum it's basically the amount they would invest to pay you over 29 years (with powerball it's 29). So the question is could you do better?

I think with this being such an obscene amount of money it wouldn't be a bad idea to take the 29 years. YOu still are getting a ton of money but it's not so dramatic of a life change.

Is there really a difference in 50 million a year and 800 million all at once? I think my lifestyle would be the same after either. Insanely rich and able to buy whatever I wanted. If I wanted to buy a 300 million dollar house, I imagine I would qualify for a mortgage since I'm guaranteed 50 million a year for the next 30.

EDIT: and by the way, I would never do that even if I could afford it. A beach house somewhere would be my main purchase.

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One of the more false statements is that money can't buy happiness. It sure could make me happy to win 1.4 billion dollars. The smile would not leave my face for quite some time.

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One of the more false statements is that money can't buy happiness. It sure could make me happy to win 1.4 billion dollars. The smile would not leave my face for quite some time.

Usually people who say that are the ones who have money.

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Usually people who say that are the ones who have money.

Money doesn't buy happiness. It buys opportunities. How you use those opportunities will determine whether you are happier or not.

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Yah, you lose the taxes, but you're losing a lot of potential interest with the annuity I woud think.

Interest in today's market is minimal anyway. If we are talking the economy of the early 90's then I would consider it when you could probably get 10-15% relatively risk free.

100,000,000.00 deposited into an account that compounded monthly @ 5% would net about 450,000,000.00 after 30 years.

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You are still getting like 50,000,000.00 every year to invest. It is not like you use up the 50 mil every year...that would start to pile up and you would be making killer interest on it after 3-4 years..you could have a couple hundred million in the bank. That is with buying homes, donating etc

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I hope someone wins this one. So I do not have to buy another round of tickets before Saturday. I just got mine on lunch. No one in the place buying tickets.

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Give me my money.

You can show me the math that the annuity is the right play, and I still want my money. I'm not letting someone hold onto it for the next 20 years.

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Is there really a difference in 50 million a year and 800 million all at once? I think my lifestyle would be the same after either. Insanely rich and able to buy whatever I wanted. If I wanted to buy a 300 million dollar house, I imagine I would qualify for a mortgage since I'm guaranteed 50 million a year for the next 30.

EDIT: and by the way, I would never do that even if I could afford it. A beach house somewhere would be my main purchase.

Yes... to me it would be like flying in a 747 vs the space shuttle. either way you are going very fast, i know. But one's a different thing altogether. But suddenly getting $500 million could turn you into MIchael Jackson crazy. I think people vastly underestimate the psychological impact. I think such a large sum could invite a bigger investment opportunity, just to do something with it, and could go bad.

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If one wanted the annuity, you could just take the lump sum, and then buy your own annuity for some lesser amount. Maybe some baseline "safety net" amount of $200k/year for 29 years. Depending upon your assumptions, that might cost $4-5 million (or less). Then you have some peace of mind, but also access to the money.

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What to Do with the Money If You Actually Win Tonight's Powerball Jackpot

With the annuity option, Powerball basically invests the money on your behalf, and, according to Hryck, you earn a pre-tax rate of about 2.8%. That’s not much, and you can do better investing on your own, but remember: that money is growing tax-free. As The New York Times points out, “you’ll never beat the effective tax rate of zero on the investment income earned inside the Powerball annuity.”

Of course, you can invest your annual annuity payout in the broad market, too, and then you pay taxes on those earnings as well. Like we said, it’s complicated.

These scenarios also assume you’ll invest your entire winnings, which is unrealistic (that private island isn’t gonna pay for itself). They assume you have decades to invest and wait out market slumps. There are so many numbers to crunch and the outcome really depends on how long you have to invest, what kind of yield you can expect, and where you live.

A multimillionaire shouldn’t have to do this much math.

Thankfully, Business Insider crunched some numbers with a lottery a few years ago, and here’s what they concluded:

if you can score a rate of return somewhere between 3% and 4%, you’re still better off with the lump sum...Factoring in investment, though, it only makes sense to take the lump sum if you think you can get an altogether reasonable rate of return.

Even the most basic, set and forget investment portfolio averages 6-7% on average, so those numbers point to lump sum. But it basically comes down to the advantage of investing the lump sum vs. the tax savings of the annuity. And most experts seem to think the tax savings of the annuity outweigh the return of the lump sum. You might also choose the annuity if you have a hard time managing your money.

Man that seems like a lot of work.... wasn't the point of winning to make your life easier? Just presents a different set of problems to worry about. Maybe I'm not aggressive enough financially but after the first few million I don't really care how much I make.... should it really keep you up at night to worry about whether you made the right decision between lump sum and annuity? You still are getting more in one year than you'll make in your life.

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What to Do with the Money If You Actually Win Tonight's Powerball Jackpot

Man that seems like a lot of work.... wasn't the point of winning to make your life easier? Just presents a different set of problems to worry about. Maybe I'm not aggressive enough financially but after the first few million I don't really care how much I make.... should it really keep you up at night to worry about whether you made the right decision between lump sum and annuity? You still are getting more in one year than you'll make in your life.

A lot of work? Take the annuity or the lump sum...whatever you want and put it in the bank and start living the good life. What is hard about that? I know the internet was made for bitching and moaning, but holy hell.

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I know the internet was made for bitching and moaning, but holy hell.

You forgot cat pictures.

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