What would you do if you won the lottery?
It’s a problem most of us may only ever dream of having. We all think about the vacations we would take, the fancy cars we would buy, and the nice homes we could finally afford. But what if we actually won? Would it be as simple as claiming our winnings and heading to the nearest Porsche dealership? Probably not.
Winning the lottery (or receiving any type of large windfall amount) comes with its own set of complications. This is why it is often recommended that you take some time to think about your plan of action before cashing in your winnings.
In our inaugural blog post here at Alliance, we’ve decided to compile a list of things you should consider doing upon winning the lottery:
Carefully choose a super-team of advisors. This includes lawyers, financial advisors, accountants, and anyone else that will aid in transitioning you into your newfound wealth. If possible withhold your net worth while reviewing candidates. This will help indicate whether or not they have your best interest at heart.
Take a breather. This will be the key to ensuring that you don’t blow through your winnings within a few years (or months) like so many past lottery winners. Take a year to digest the enormity of your winnings and in the meantime, invest your money in an interest-bearing vehicle such as a Guaranteed Investment Certificate or a bond. Did you know that $5 million invested at 2% for one year is equal to $100,000? This is more than enough for most individuals to live off in the following year.
Create an allowance. One of the most practical things we’ve seen from past level-headed lottery winners has been setting an allowance for expenditures. With the help of a financial advisor, creating a budget and giving yourself an allowance will be the ticket to not squandering away your winnings.
Continue working. Whether it is your current job or finding your dream job, working will not only give you a sense of purpose, but will give you a steady stream of income to ensure that you don’t become reliant on your winnings.
Enjoy yourself. The tips above may seem rigid, but will ensure that your winnings sustain you throughout life with little worry. After setting up a responsible, forward-looking financial plan, enjoy yourself. Always wanted to go to South America? Go for it! Want to take your family to Disneyworld? Now is the time.
You now have enough money to do virtually anything you’ve ever wanted to do. Act responsibly from the onset and you can enjoy your money for years to come.
Now if only we had a guide to how to win the lottery...