That still doesn’t change the fact that if you take the annuity payout rather than the lump sum, you get $75MM, which is what you won. If you take the lump sum, then you get screwed if the annuity fees are included in the discount. But the winner doesn’t get hit with any annuity fees if they take the annuity - the lottery commission provides enough premium, including fees, to the insurance company to pay the winner the $75MM that they won.
Yeah, the ‘invest it properly’ is the issue. Those who buy lottery tickets are generally those who are least equipped to actually invest it. Which is why they get sucked into trusting ‘financial advisors’ who are eager to sell them high priced annuities, when it would have been more cost-effective to just take the annuity from the lottery commission.
Thursday! I don’t buy lottery tickets with any expectation of winning (well, I suppose other than the expected value of 1 out of 573,637,629 or something like that). Instead I buy them as a form of entertainment. I buy it, fold it into thirds, and then place it into my wallet. It’ll remain there for weeks sometimes before I check if it is a winner. With any luck, I don’t hear anything about winners or losers or where they may be located or if they’ve appeared yet or not, and then I get weeks of entertainment of having a slip of paper [potentially] worth tens of millions in my pocket.
I also only buy tickets when the jackpot is into the 9 figures level, not because 8 figures wouldn’t “change my life” any less than 9 figures will, but rather because I don’t want to waste $2 (or $4 if I buy both big lotteries) all the time, but instead only rarely. I did win $2 and $4 over the last few decades, and promptly used those winnings to buy another ticket (assuming the jackpot was still high enough).
Investors in Berkshire are hoping that Buffett picks people as well as he picks companies. If he chose the right people (mostly “person” named Greg Abel) to take over after his death, then investors may see another few decades of good stewardship.
Not me… give me the lump sum. Figure ~37% goes to taxes, leaving me about $42M to put in the market. I’ll blindly draw 4%/12 monthly of whatever the current value happens to be. The draw can go up or down as the market fluctuates. Initially that’s over $150k/month. I’ll find a way to scrape by, lol…
I am a Vanguard Total Market investor, but I think about BRK sometimes. Particularly how Intercst uses it as a way to control capital gains (because there’s no forced dividend that gets taxed). It’s really too late for me to switch because I have big embedded capital gains in VTI. And I’ve seen so many things in my lifetime that I never expected. I’m not sure that BRK going forward will remain the type of investment that it is today. There is the Lindy Effect…the longer something has been around the longer it’s likely to remain around. But that doesn’t apply to 94 year olds. Who knows what BRK will be in 10 or 20 years? I’m not sure that putting most of one’s wealth there is better than buying VTI and paying the tax on dividends.
You don’t get $75 million when you chose the lump sum. The lottery is smarter than that. You get a discounted amount, usually 40-50% of the winnings, so instead of being able to put $42M in the market, you would get about $23M to put in the market (assuming 50% of the winnings and the 37% tax bracket).
