What if…. You won the lottery? What would you do?

1. 1. Greg

   I wrote a post thinking your numbers were off, but then I realized you are Canadian. So I may be wrong. I will explain how things work for us in the United States. Our Lotteries are taxed and paid out over time ( 20 years usually). If you want a lump sum, you take a lot less at once. Then 40% or so is deducted for taxes. Is the lottery a tax-free lump sum in Canada?

   Normally, A $30 million jackpot will actually pay out half that in a lump sum, maybe $15-16 mil.
   Taxes will then be deducted.

   If you win a $30 mil jackpot, your 1 and only check will probably be $9-10 mil, tops.

   To actually receive $30 million here in the US, one would need to wn a Jackpot of about $100 million.

   I think most lottery winners go broke because winning $1 million does not make one a millionaire. A $1 million lotto will pay $50,000 per year. I dont know many people who make $50,000 a year and stop working after only 20 years who retire early as millionaires. These lott0 winners stop working, then they buy a house, cars, things for friends,etc but are only really making $35,000 a year or so and can’t afford anything.

   Even winning a $10 million Powerball wouldn’t guarantee retirement ( unless you are already very old). Since this would probably mean $3 mil after taxes.

   Another thing to take int account is monthly fees, maintenance, tax insurance,etc. For example, here it a very common that a $1 million house would cost about $20,000 a year in taxes, several thousand in insurance, and maybe as much as $10,000 in electric/utilities. Luxury cars also cost more in insurance, repair, fuel,etc. If you make a million dollars and buy a house with that, you will need to make at least $100-200,000 per year for the rest of your life to even afford to keep the lights on.

   I think your strategy sounds good, I was just wondering if your numbers are inflated by 200-300%?

   Dec 21st, 2006 @ 8:34 am

2. 2. Canadian Dream

   I like to play with game with my family some days. It’s a fun to do once in a while.

   1)Pay off all debts.
   2)Setup income portfolio.
   3)Quit job and write full time.
   4)Max out the kid’s RESP
   5)Perhaps start a company on eco home building to prove to the world you can build a better house with a small capitial cost increase ($5 million).
   6)Pay someone else to finish painting the house and install new flooring.

   CD

   Dec 21st, 2006 @ 8:57 am

3. 3. Q Cash

   I have often dreamed (and paid the “tax on the stupid”) about winning the lottery. My wife says she would hate to win that much because everyone would be scrambling to get a piece of you (as per item 1 in your list).

   She says she would be happy with the Cash for Life for $1000 tax free a week.

   I pointed out to her that the $1000 per week was the goal for my early retirement program, so by investing and saving we had much better chance of doing the CAsh for Life by ourselves, so save the $4.

   That doesn’t mean I won’t pick up a quick pick or two tomorrow (I mean, SOMEONE has to win, right :-)

   Q

   Dec 21st, 2006 @ 9:03 am

4. 4. FrugalTrader

   I’m sure that everyone has day dreamed about winning the lottery. And i’m sure that winning it is MUCH different than what we THINK it would be like.

   Funny thing though, i have this plan in place and I don’t buy tickets. :)

   FT

   Dec 21st, 2006 @ 9:27 am

5. 5. WishBoNe

   Ooo la la! My following plan is almost the same as yours.

   1. Pay off the debts (luckily, not too heavy in this area, whew)
   2. Buy an apartment.
   3. Buy an overseas property as an investment (hopefully I have enough).
   4. Invest on some bonds and futures (I think I will need an advisor on this).
   5. Give away 10% to my family and some relatives.
   6. Buy a car or two.
   7. Quit my job and do something that I really want to do all these years.
   8. Continue blogging :D
   9. Keep the rest for other payments.
   10. Build a vacation house overseas with hills and river (I love the hills where LOTR was shot :P ).

   The thing is, I don’t live where you’re living. Darn.

   Dec 22nd, 2006 @ 6:52 am

6. 6. FrugalTrader

   Hey Greg!

   Sorry for taking so long to moderate your comment, it was sent to the spam mailbox for some reason.

   But yes, Canadian lottery winnings are treated differently than US lottery winnings where CAD winnings are tax free. I’m not sure about the lump sum business as I dont’ pay a lot of attention to the lottery procedure.

   FT

   Dec 24th, 2006 @ 10:08 am

7. 7. i have no money

   eg 5 mill

   1 send wife and kids to my homeland
   2 pay all my debt
   3 pay my friend house (helped me a lot)
   4 BMW 540 for me and x5 for wife
   total + - 500 000
   rest of money
   a)30% mutual funds
   b)30% my portfolio encana suncor potash maybe some nortel aberdin minerals or something (energy and mining) some silver some realestate in toronto dwntwn (condo) rental inc
   c)5% google stok
   d)10% babys bufets
   e)10% gold
   f)5% gic
   g)5% some solid investment for kids
   h)5% cash

   Jan 7th, 2007 @ 4:22 am

8. 8. steven

   Develop 10 acres of my land with sewage/pipeline. And build an apartment building or neighbourhood. Hire a property manager and collect my passive income. =)

   Jan 8th, 2007 @ 1:18 am

9. 9. tim brown

   I’d go to casino niagara, take the 30 million dollars, go to the roulette table and put it all on #36. After I won, I’d take my 1 billion dollars and invest it sensably :D

   Jan 8th, 2007 @ 8:11 am

10. 10. Jason

    Lottery winnings in Canada are TAX FREE because the taxes have already been taken from them. Lump sum or monthly installments do not make a difference, so might as well get it all at once and then ram it into some investments!! :)

    Jan 12th, 2007 @ 2:11 pm

11. 11. disaper/////

    I would pay off all my debts, give money to my kids enough for a down payment on a house or school(cant give them to much, they would have to learn how to deal with what I give them and leave the rest for a will) Have a safty net in my husband and my joint account. spend a little, go on a long trip. Bank alot of it, get a new house some where that I can grow veg, apples, and produce. split what ever left over between my husband and I with legal documentation just in case. stay at home and be a home maker,and enjoy my family(which is hard right now cause it takes two to make a living)I would be able to clean my house all day, garden cook and bake my family cookies and cakes. I would make sure I would never have to work again…..

    Jan 23rd, 2007 @ 9:45 pm

12. 12. markus

    Interesting Forum.. and i HAVE a ?Question? at the end :)

    Yes.. i’m canadian so im assuming a lumpsum one-time multi-million dollar pay off..

    this is..
    MY CURRENT WINNINGS STRATEGY
    1) I would change my address AND phone numbers

    2) I would give 10% to my pre-designated charities..none of these bleeding beggers that come looking for you.. AFTER you win..

    3) In changing my address.. i would custom build a moderate home in the $500,000 range.. NOTHING too fancy..double car garage- indoor heated pool

    4) Invest in a couple decent rental properties maybe a triplex.. so there is residual monthly income..

    5) A Subway Franchise.. (as the McD’s dream.. i) too expensive and ii) people eating smarter )

    6) A Hybrid Camry.. (stop being a slave to big oil companies)

    7) Pay off credit cards

    8) designate 5% for my children’s Education/future

    9) A few sound Retirement Plans.. (mutuals/diversified)

    10) Friends and Family Fund 5% (this would be to repay.. anyone WHO in the past - bent over backward to make my life easier - pay off some of their debts.. or put a new roof on their leaky house.. a practical car if their jalopy is about to break down.. $0 for any sudden NEW friends that you haven’t seen in 5 years.. or relatives that didnt have the decency to attend your mother’s funeral (that may sound harsh..but my mom was the first person to lend some of these mooches money.. and hey couldnt pay her any respects ?? )

    11) Rest.. cover lawyers, legal fee’s property taxes, Accountants.. - and rainy days..

    NOW the Question I have..

    What if you are a Canadian.. and you win a US Lottery..

    or.. $10,000 at Vegas.. they have a NASTY WITHOLDING TAX on any winnings over $600

    I understand.. as a non-US citizen.. you can apply to get some of those taxes back..

    Somebody told me.. that.. the method some of those “recovery” companies use.. is to have you apply for.. a Social Security Number.. -but wouldnt that put you one step closer to becoming a u.s. citizen..thereby entitling them (US Gov) to keep your taxes? :P im sure i was mis-informed ..or didnt understand their reasoning..

    Anyway..
    What im Trying to figure out is..

    if you won 10,000,000$ in a US Lottery (and we will uncomplicate the formula by not worrying about conversion to canadian) ..and YOU Take the 25 year annuity method.. that would be $400,000 a year.. before taxes.. and they lob about 45% off that.. leaving you.. $220,000 a year.. i can live on that im not greedy.

    IF you take the Quick CASH claim.. the prize is only valued around $5.5 million US before taxes.. lob off another 45% and you are down to $3,025,000 one time claim..

    Would you be better off.. FILING every year.. to try and get back a portion of your $180,000 ? based on your annuity… or …would you go after the 2.475 mill they took ONCE?

    …if anybody could tell me.. (FROM FIRST HAND EXPERIENCE) - a) how the tax recovery program works… b) how much do companies charge to chase it down for you .. c) is there ANY Limits to the amount you cant attempt to recover.. or the number of times you apply (assuming you attempt to do it annually if you took the annuity method over 25 years) ..

    .. the answers will then be INTEGRATED INTO MY WINNINGS INVESTMENT STRATEGY

    Mar 3rd, 2007 @ 8:55 am

13. 13. saaad

    money is nothing but money is every thing so money is nothing but now is every thing

    Nov 2nd, 2007 @ 3:10 pm

14. 14. Michele

    When I win the 30 million:

    1. do the happy dance, scream, yell, and I will probley look like some one who has been possesed.

    2. get a plan set up, who is going to look after the kids when my husband and I pick up the cash.

    3. take off. leave no trail and tell no one. While we are on our way phone the bank and set up a meeting with our advisers. Phone work and call in sick.

    4. get money. see the bank and pay off every thing we owe money too. get checks made out to family members and friends. Set up bank accounts for kids and with the money left over seperated it between myself and my husband. Making sure there is a lawyer in the room to varavie it and make out paper work that the money was seperated. (just in case.)

    5. take the kids out to dinner and give them a little bit of money in a walet each and tell them that we won.

    6. Phone and make an appointment to see my dream home the one with the serurity system. buy the house. talk to work about a leave of absence.

    7. With my share of the money: I would spend some, save lots and give some to charities. I would go back to school and full fill my promise to my kids and take them to disney land.

    8. after a year of absence from my job and time to get over the fact that I am a millionair I would either go back to work and tell everyone I blew all my money and I am broke or, I will just stay at home and become mother of the year.

    Either way, My life would change, but I wont. I will remain the same.

    Nov 3rd, 2007 @ 6:44 pm

15. 15. Steve

    I never buy lottery tickets, I also subscribe that they are an idiot tax. But I often get them for birthday gifts, etc.

    If I won? . I would not be that happy. Here’s some common things people do.

    1) Quit their job. I would NOT do this. I busted my ass to earn my bachelor’s and master’s degrees. I’ve also worked very hard to build a rewarding career. If I quit my job because I suddenly became it would mean I wasted all that hard work and lost out on reaping the long term rewards.

    2) Pay off their debts. I have had no debts since I paid off my student loans (which I worked two jobs after I graduated to do in less than a year, $19,000 paid off).

    3) Pay off the house. Since I don’t own a house outright, this would be a no brainer. I’m planning on buying a house with my fiance next year. It will be my first house, but she has some equity in her condo. We will be putting about 40% down and I hope to have the house paid for in 5 - 6 years.

    And really, I would feel pretty crappy about paying off my house with lottery winnings. Many people work very hard for decades to pay off their mortgage. Doing it with lottery winnings seems like cheating.

    In short, ever since I started university, I’ve been following a dedicated plan involving career and finances that provides a lot of self satisfaction for a job well done. When I pay off my mortgage finally it will feel great (not because the debt is gone, because the dedication over the years has come to fruition.)

    Likewise, I like learning about investing and hope to build a sizable portfolio over the next couple decades and once again take satisfaction in my research and dedication to a plan.

    So in summary, winning the lottery would literally ruin all the hard work I’ve done over the past 10 years.

    So what would I really do?

    Pay off my parents debt and house, pay off my sisters debts and house, by them new cars, set up an RRSP for my parents, setup an RESP for my sister’s baby.

    The only way I think I could truly “enjoy” the lottery winnings (and this is still cheating) is dontate the rest to charity over time such that the massive annual donations tax credit offests my own taxes to a balance of zero. (Probably could do this for 5 years before what’s left of the million would run out.)

    Nov 3rd, 2007 @ 10:06 pm

16. 16. Steve

    I never buy lottery tickets, I also subscribe that they are an idiot tax. But I often get them for birthday gifts, etc.

    If I won? “Sigh.” I would not be that happy. Here’s some common things people do.

    1) Quit their job. I would NOT do this. I busted my ass to earn my bachelor’s and master’s degrees. I’ve also worked very hard to build a rewarding career. If I quit my job because I suddenly became richit would mean I wasted all that hard work and lost out on reaping the long term rewards.

    2) Pay off their debts. I have had no debts since I paid off my student loans (which I worked two jobs after I graduated to do in less than a year, $19,000 paid off).

    3) Pay off the house. Since I don’t own a house outright, this would be a no brainer. I’m planning on buying a house with my fiance next year. It will be my first house, but she has some equity in her condo. We will be putting about 40% down and I hope to have the house paid for in 5 - 6 years.

    And really, I would feel pretty crappy about paying off my house with lottery winnings. Many people work very hard for decades to pay off their mortgage. Doing it with lottery winnings seems like cheating.

    In short, ever since I started university, I’ve been following a dedicated plan involving career and finances that provides a lot of self satisfaction for a job well done. When I pay off my mortgage finally it will feel great (not because the debt is gone, because the dedication over the years has come to fruition.)

    Likewise, I like learning about investing and hope to build a sizable portfolio over the next couple decades and once again take satisfaction in my research and dedication to a plan.

    So in summary, winning the lottery would literally ruin all the hard work I’ve done over the past 10 years.

    So what would I really do?

    Pay off my parents debt and house, pay off my sisters debts and house, by them new cars, set up an RRSP for my parents, setup an RESP for my sister’s baby.

    The only way I think I could truly “enjoy” the lottery winnings (and this is still cheating) is dontate the rest to charity over time such that the massive annual donations tax credit offests my own taxes to a balance of zero. (Probably could do this for 5 years before what’s left of the million would run out.)

    Nov 3rd, 2007 @ 10:07 pm

17. 17. Steve

    I never buy lottery tickets, I also subscribe that they are an idiot tax. But I often get them for birthday gifts, etc.

    If I won? “Sigh.” I would not be that happy. Here’s some common things people do.

    1) Quit their job. I would NOT do this. I busted my ass to earn my bachelor’s and master’s degrees. I’ve also worked very hard to build a rewarding career. If I quit my job because I suddenly became rich it would mean I wasted all that hard work and lost out on reaping the long term rewards.

    2) Pay off their debts. I have had no debts since I paid off my student loans (which I worked two jobs after I graduated to do in less than a year, $19,000 paid off).

    3) Pay off the house. Since I don’t own a house outright, this would be a no brainer. I’m planning on buying a house with my fiance next year. It will be my first house, but she has some equity in her condo. We will be putting about 40% down and I hope to have the house paid for in 5 - 6 years.

    And really, I would feel pretty crappy about paying off my house with lottery winnings. Many people work very hard for decades to pay off their mortgage. Doing it with lottery winnings seems like cheating.

    In short, ever since I started university, I’ve been following a dedicated plan involving career and finances that provides a lot of self satisfaction for a job well done. When I pay off my mortgage finally it will feel great (not because the debt is gone, because the dedication over the years has come to fruition.)

    Likewise, I like learning about investing and hope to build a sizable portfolio over the next couple decades and once again take satisfaction in my research and dedication to a plan.

    So in summary, winning the lottery would literally ruin all the hard work I’ve done over the past 10 years.

    So what would I really do?

    Pay off my parents debt and house, pay off my sisters debts and house, by them new cars, set up an RRSP for my parents, setup an RESP for my sister’s baby.

    The only way I think I could truly “enjoy” the lottery winnings (and this is still cheating) is dontate the rest to charity over time such that the massive annual donations tax credit offests my own taxes to a balance of zero. (Probably could do this for 5 years before what’s left of the million would run out.)

    Nov 3rd, 2007 @ 10:08 pm

18. 20. Nicki

    1) Do the silent happy dance
    2) Leave my lazy CLS
    3) Pick up my cheque
    4) Buy mom new house
    5) Quit job, invest, travel!!!

    Nov 30th, 2007 @ 5:01 pm

19. 21. Samie

    June 2006, i won the lotto, MegaMillion Cincinnati Ohio. $316,000,000 yeah that number is right. And on top of that i was the only person to hit the number. I bought the ticket at a Kroger on Short Vine Street. Was working for a school as a janitor at the time i was 34 years old. I have had to change my phone number, in a way its a pain in the ass. But the things i have done, places i have been and cars and property, business i have bought make up for it. I got after everything was worked out $106,000,000 million dollars. I have spend around $50k a month and with my investments and intrest i could spend 5Xs that a month. But i see no need. I spend a month now what it would of taken me 2 years to make when i was working.

    May 12th, 2008 @ 1:55 pm

20. 22. John J Bradshaw

    if I ended up with 10 Million After Taxes in a lump sum I would
    1) Put 10% 1 Million in a seperate account Money Market accout at 10% interest and designate various charities that the interest would be paid to for life I may have to set up some kid of trust that wont be touched after my death I believe i the log run God would end up getting a lot more than if I just gave it all at once
    2) I would put another 10% 1 Million in a seperate account for my parents then use it to pay off all of there debt buy them some land and have a new house builtI would keepit in my name to avoid them paying givt tax and I would pay the taxes each year out of what is left also drawing 10% interest
    3) I would put 25% 2.5 Millionin a third account with a 10% interest bringing in 250K gross a year dedicating 10% of that to the first account each year
    4) I would pay off my current dept 200K house truck credit cards and all.
    5) I would pay off my Bosses debt 200K or so because he took me in and traned me how to make a 100K a year on the phone recruiting and I would buy the company that both me and my wife work at she is VP of operations and I am VP of Financial Services another 100K or so should be enough then I would put him on 100K a year salary after putting 3 million into the company name it in an interest bearing account 10% making 300K a year paid in to my expense account that would pay all the company bills with so every year all bills are paid even if I dont bring a dime into it then I would take 1 million also put into the company for expansion upgraded office space then hire 10 people to make cold calls so that Jim and I can close
    6) I would take my last million to buy a 400K - 500K dollar Home then sell the one Im in that I would already have paid off for 200K and I would buy my wife a new car 40K - 60K
    7) I would have a professional company build me a 1969 R/T Hemi Charger 80-100K complete modern interior electrict windows door locks est Dont worry I wont use a numbers matching car and the 426 Hemi would be a crate fully blown for show and I would drive it back and forth to work
    8) the last 300 plus would go in my account for my wife to go shopping for the house crasy will she complains about me spending so much for an old car

    Jul 9th, 2008 @ 10:01 pm

21. 23. John J Bradshaw

    I need to make a correction instead of getting 10% Money Market rates in this curent market I could only get 4.75% at best

    Jul 9th, 2008 @ 10:48 pm

22. 24. Jenny

    First i’d collect the ticket
    then punch s0me civilians with joy
    give half to the person hu sold me the ticket
    take a bath in the money
    wall paper my house with the money
    make a dress out of the money
    grind up the money nd make a eyeshadow out of it
    then buy a pig.
    to gaurd the money.

    Jul 30th, 2008 @ 10:00 pm

23. 25. Bimonator

    If I won the $30 MIllion lottery there what I would do:

    Spend about $5 Million on cars (I’m a serious car lover)

    Build a nice home, nothing too big, only $700K area

    Put exactly $15 million ina savings account to gather interest which will gain interest of about $1 350 000 annually

    I would buy a nice condo in a few of my favorite cities around the world (Los Angeles, Miami specifically)

    The remainder would be left for decades of nice dinners, shopping, vacations, my grandmothers well being in her old age and my childs education

    Aug 6th, 2008 @ 8:45 am

24. 26. Jack

    Well, my strategy was written up by a Delta airlines magazine column many years ago.

    First, you need to win enough to be “set for life.” You can define that, but my guess is something like $10-20 million after taxes.

    First, keep quiet. Make your plans with trusted attorneys and financial advisors. Realize that they’re worth modest fees — don’t stiff them, but make it clear that you’re not a gravy train. Somebody I knew that was well-to-do used to tell me that he always “bought lunch,” because anytime somebody bought his lunch, it cost him more than he would have spent …

    If the newspaper calls about writing a feature story about the newest local multimillionaire, just talk about your stamp collection or something just as boring.

    Second, quit your job. All your co-workers are going to be jealous. And don’t start a business. Lottery winner businesses almost always go broke … you don’t need the income and any help you hire may end up with the same attitude.

    Then, I’d put some money aside for taxes (chances are your tax bill will be higher than the lottery authority will withhold; again, that’s why you hired tax and legal advisors), charity, gifts to friends and family, and enough money to live for a year or two — including some “mad money,” maybe a vacation home, new cars, payoff bills, whatever.

    The balance would be invested conservatively (perhaps in tax-exempt bonds, etc.) with the plan to use the earnings of those funds to cover living expenses. Haven’t thought through the estate planning end of it … will leave that to the legal and accounting folks …

    Aug 14th, 2008 @ 7:34 pm

25. 27. megan

    i plan on winning tonight :)
    10-17-23-44-53=42
    04-20-31-34-47=34
    06-18-20-33-46=14
    10-17-23-32-51=16

    SAY THEM OUT LOUD

    Sep 11th, 2008 @ 12:18 am

26. 28. Markus

    Hey Megan.. we need to talk, im Markus - the poster…way up the list there.. if you wanted to send me your email address.. :) thx

    Sep 11th, 2008 @ 7:11 am

27. 29. Youd Like to know

    I’d make my own debt, and sell it to you all with interest.

    You should figure out what that means.

    Oct 9th, 2008 @ 2:09 pm

28. 30. Steve

    Personally $30,000,000 easy.

    Stick it in the bank, I already found out banks will pay up to 8% to have it all in there bank.

    So imagine $30 Million x 8% is an interest of $2,400,000 or $200,000/month

    Just leave $30 Million in the bank and live of $200,000/month I think that is possible for many of us..lol

    Even a mansion would be $25,000/month plus cars, expenses etc you probably still have $50,000/month in cash

    Oct 31st, 2008 @ 1:15 pm

29. 31. Scott

    Makes me chuckle that so many people put “Pay off debts in full” at the top of their list. Screw that. Let the repo-man take my Visa and my crappy over-valued house too for that matter! Let THEM deal with my debts!

    And forget about all the complicated “Set up 15% investment account with 9% cap gains and 4% dividends and diversify and blah blah” plans! Simplify, simplify, simplify!

    I would take off (eh) to somewhere like Vietnam or Thailand where my $30M would get me 100 times what it would in Canada. I guess that would mean I would have to quit my job ASAP (and not be bitter about it like some people) and find something new to do. Like eat fresh mangos every morning and play pachinko in the evening. :)

    Time is money, after all, so with $30M in the bank, I would have all the time in the world to enjoy it!

    Nov 1st, 2008 @ 12:16 pm

30. 32. Tim Singleton

    1. Pay my tithing.
    2. Pay off all my bills.
    3. Buy my parents an annuity or an interest paying trust fund so I could not screw it up.
    4. Probably go to work for Children International full time for free in the Philippines and act like I was broke.
    5. Continue to blog as well.
    6. See if I could quadruple what was left as a legacy for my future kids.

    As for other things? My tastes run to the simple. Not having to have a boss and a timeclock would do me for a while. I would probably invest in some cool rims and low profile tires for my SUV and a stainless steele Submariner, though.

    …and finally take a nap without worrying about how I was going to pay all the student loans off!

    Nov 18th, 2008 @ 9:55 am

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