What would you choose if you were the one

[HyperCodexV]

A man in Illinois won a $1.04 billion jackpot a few days ago, now he has to choose how he would receive his money.
He could accept a total sum of $450 million at once or receive 30 payments in instalments for the next 29 years.
The lump sum of $450 million sounds nice, but when you consider the taxes, you might be walking home with just over half of that money at the end of the day. I'm not a tax expert, and I don't know the tax regulations of the US or the state, but from my rough reading, you'll have to pay about 40%-42% total in taxes for that amount.

If you receive payment in instalments for 29 years, you would receive about $34 million years. So if you take out a total tax payment of about 40%, you would receive about 20-21 million every year after tax.
So what would you choose if you were the one?
For me, I would choose to receive the payment by instalment. $20 million a year puts me in the top 1% of earners in the world, and I can do whatever investment I want to with that. With a payment like that, I may not even need to touch a penny from the other payments.

The full story here and Here

I will gladly take the installments $20 million a year is more than enough to live like an ancient egyptian king. You don't need to touch the initial capital just live off the interest and let the rest grow. Plus there's something to be said for not having access to all that money at once It protects you from bad decisions, greedy people and the pressure of managing a billion dollar jackpot. The lump sum is tempting but it is also risky. With installments you get steady income for life and you will never have to worry about running out.

[Marykeller]

I don't see the need to choose the installment plan for 29 years; the 40% tax money will still be paid each year. The 40% tax money to be paid is one of the reasons I don't want to choose a lump sum in the first place.

If I am in man's shoes, I would love to be paid the total amount. Let the 40% tax money be taken at once. Let me then do whatever I have to do with the money, rather than thinking that 29 years is a guaranteed period to be healthy and strong

[Samlucky O]

If you receive payment in instalments for 29 years, you would receive about $34 million years. So if you take out a total tax payment of about 40%, you would receive about 20-21 million every year after tax.
So what would you choose if you were the one?
For me, I would choose to receive the payment by instalment. $20 million a year puts me in the top 1% of earners in the world, and I can do whatever investment I want to with that. With a payment like that, I may not even need to touch a penny from the other payments.

Well if I was in his shoes I will accept the payment by instalment because that will help me to plan ahead of the money before receiving the next one. Because there is a kind of money you recieve and without a second thought you misuse it because there was no plan before it came or it was just tempting to still bet again. $20m every Year is enough to extablish one's self and do a reasonable thing with it. And if perhaps it was misused in the first year, there will certainly be another chance or new plan to utilize the money effectively without mistake.

[yixichloro2xx]

I would gladly take the $450 million and pay my tax. Let's assume that the both Federal and state tax is 24% , so I will surely end up with $200+ million liquid cash. Bro that money is enough for me and my family to use till old age. If you look at it , some millionaires are cash poor, alot of their networth is based on the asset they own. I studied Petroleum engineering, I will take part of the money and go into oil and gas business to generate more cash flow (would be perfect if done in Nigeria tho), invest into Bitcoin and other asset. Doing that I will still be left with good cash in the bank and I am someone who doesn't  spend on unnecessary things. Taking payment installmentaly  is good, but anything can happen along the way, e. g the company shuts down or file for bankruptcy which disrupt your money.

[Jaycoinz]

I would gladly take the $450 million and pay my tax. Let's assume that the both Federal and state tax is 24% , so I will surely end up with $200+ million liquid cash. Bro that money is enough for me and my family to use till old age. If you look at it , some millionaires are cash poor, alot of their networth is based on the asset they own. I studied Petroleum engineering, I will take part of the money and go into oil and gas business to generate more cash flow (would be perfect if done in Nigeria tho), invest into Bitcoin and other asset. Doing that I will still be left with good cash in the bank and I am someone who doesn't  spend on unnecessary things. Taking payment installmentaly  is good, but anything can happen along the way, e. g the company shuts down or file for bankruptcy which disrupt your money.

It's not all about the tax payment when you decide on the option of taking the money lump sum, that much money can make one go crazy and attracts so many attention and unwanted focus on your life, I will understand that this still ties down to the individual and how is able to control the money but if you check the stats, you will know that many persons have won the lottery and still end up not having much or living up to the standard of their lifestyle especially after the first 5-6 years of having such responsibility with the money so I think the better option is actually the payment spread across the many years to come as that would guarantee even something like a lifetime investment without actually doing anything.

[Hispo]

I am not sure which one I would take.
If the lottery continued to pay my family in the case of me dying, then it would easier for me to choose the second option and get a gradual payment, but I doubt that is part of their terms of service.

Sometimes I forget how brutal taxes are in the United States and in order countries in the first world... In my opinion, gambling profits should be left alone, like in some countries like Australia. It does not make sense to ask for money coming from full-risk activities like gambling.

[JunaidAzizi]

So, to be more realistic and safer, I will choose the lump sum. Yeah, you heard it right, most people choose the second option and can eat for 29 years without any work needed, but that is a more risky option. Over time, the laws can be changed, and the tax can be altered with each government, as it is such a long time. As you know, no one can know the time and place of their death, so the better option is to take full control of the money immediately and then use it for investment. Even if you can get 5% annually, then you can easily earn a lot, and your fund will also be safe. The installment plan may sound good, but if you think about it, you will know that having full control over the investment is more beneficial.

[retreat]

The tax may make people think twice about being able to receive the payment at one time. But $450 million at the moment is a huge amount, with that money I might be able to create several companies and several more to invest. I can still get passive income and at the same time a company to keep my money flowing. Maybe by accepting payments in installments it can reduce the tax burden, but it is 29 years, I am not sure that in 29 years I will still be able to enjoy my big winnings or not. So instead of regretting it later, it's better for me to take the lump sum and enjoy it to fulfill all my dreams

[Grace333]

Both options are good, depending on the winner's intention of using the money. If he wishes to build a business, then receiving the money in bulk would be a good idea, but it would be his loss to take such an option. On the contrary, if he decides to pick the option of receiving payment in segments for 29 years, then he would receive around $34 million per year, which is also a good amount for a business and other expenses, provided he works with a designated budget.

[samadam007]

I prefer to have my money at hand now than to wait 29 yrs to collect everything. I could put most of it in good bank or other low risk investments and let it earn interest every year for me.

The important thing is not start spending the money lavishly just because it is available. Protect the principal, do my spendings from a portion of the interest, and re invest some of interest so that the money can keep growing. The instalmental payment also a lot of money, but taking lump sum will give me more control. I don't have to wait until next payment before making financial decision.

[famososMuertos]

This has happened before, and I'm not talking about the topic itself, which is overdone; I'm talking about the thread in question. I think this is the third version where only the context changes. Anyway, it's an individual decision that's influenced not only by personal interests but also by tax rates.

In any case, the long-term decision isn't so far-fetched, since many winners of these prizes have ended up losing their money because they didn't know how to manage it. A future payment is beneficial in that sense, but in my opinion, the best option is to take a single payment.

In the United States, taxes are something citizens are used to. The state of Nevada exempts winners, but for example, Gordon Vayo (cases that I remember; poker) won more than $5 million, but because he lived in San Francisco, he was taxed at 51%, and so on. I think New York is another state with high taxes.

[uneng]

I would take the prize at once. That is the best alternative. 29 years is a very long period of time and anything can happen meanwhile. There aren't any assurances they will keep paying you each month for that long. 450$ million - 40% taxes mean 270$ million. It's a very decent amount of money which you can make grow much more in 29 years than the amount of money you would receive from them monthly, especially taking inflation into consideration.

[Silverstonez]

Both options are good. But if anything happens to the person like he died, will they continue to pay the guy family the money? But that also has disadvantages.

I will prefer to receive $450 million and pay the tax. If it is payment on installment, I will still pay the tax. I will prefer the lump sum. Both the two options are good.

Common $1 million is not a small amount money. If I receive $200 million, that is more than a life fortune for me.

I was about to ask OP the same question regarding the second option, because anything can happen along way and 29 years is nearly three decades, however, I don't know how these kinds of things are handled in the US, but I doubt if the lottery would continue to pay the installments to his family if he passes away. I would rather go with go with the $200 million after tax, although, both options can be good as you said, but in my opinion, I think the first option is better than the second.

[Fivestar4everMVP]

If you receive payment in instalments for 29 years, you would receive about $34 million years. So if you take out a total tax payment of about 40%, you would receive about 20-21 million every year after tax.
So what would you choose if you were the one?
For me, I would choose to receive the payment by instalment. $20 million a year puts me in the top 1% of earners in the world, and I can do whatever investment I want to with that. With a payment like that, I may not even need to touch a penny from the other payments.

Before coming to such a conclusion, you will definitely have to consider alot of factors, I believe that there must be rules and regulations, or terms of agreement that must be signed for the yearly payment, one will have to read what's written in the agreement before deciding, there could be things or circumstances that could lead to cancellation of the yearly payment while going into the future, for example, the lottery company may have issues that could lead to bankruptcy, which automatically means they can no longer afford to continue paying you as agreed, what then becomes of the rest of your money?

It is commonly said a bird at hand is worth millions of others in the bush, I think in a situation like this, I would put greed aside and go with the lumpsum amount of $450m and it doesn't matter what the tax will be, even if what I end up getting is $200m, with this amount of money, I am settled for life, I can build businesses, invest in good places and never have to be poor again.

[Floxynice]

If you receive payment in instalments for 29 years, you would receive about $34 million years. So if you take out a total tax payment of about 40%, you would receive about 20-21 million every year after tax.
So what would you choose if you were the one?
For me, I would choose to receive the payment by instalment. $20 million a year puts me in the top 1% of earners in the world, and I can do whatever investment I want to with that. With a payment like that, I may not even need to touch a penny from the other payments.

Well if I was in his shoes I will accept the payment by instalment because that will help me to plan ahead of the money before receiving the next one. Because there is a kind of money you recieve and without a second thought you misuse it because there was no plan before it came or it was just tempting to still bet again. $20m every Year is enough to extablish one's self and do a reasonable thing with it. And if perhaps it was misused in the first year, there will certainly be another chance or new plan to utilize the money effectively without mistake.

Yea, alot of gamblers do not have plans for what they will do with their money if they win. A lump sum payment will be a very bad decision for gamblers who have no plan, they might misuse that money out of panic and confusion on what exactly to do with the money. I will not be surprised seeing such a clueless gambler partying every night thinking that the money is too much to be exhausted. Receiving the money in bits for years will be a better option because it will give them enough time to plan their lives and decide properly what to do with the money.

As for someone like me, I have investment plans in my head just waiting for capital to execute the plans. Whether lump sum or instalments, I will do well. But I will prefer a lump sum because 29 years is a very long time and we all cannot predict what will happen then. What if the casino faces some serious issues and payments are paused?

[Proty]

The two options is okay and it depends on the individual. For someone that can't be able to manage large amounts of money going for instalment payment won't be a bad idea. Infact it saves them from wasting the money on irrelevant things. Taking all the money at once is also a good idea in the sense that when the money is invested in a good business it can be able to yield more profits when compared to taking it in instalments. The two options has its advantages and likewise it's disadvantages. Therefore the options that should be choose depends on the individuals.

[Fiatless]

I would take the prize at once. That is the best alternative. 29 years is a very long period of time and anything can happen meanwhile. There aren't any assurances they will keep paying you each month for that long. 450$ million - 40% taxes mean 270$ million. It's a very decent amount of money which you can make grow much more in 29 years than the amount of money you would receive from them monthly, especially taking inflation into consideration.

If you have a business or sector you can invest the lump sum in and it will bring good returns periodically, that will be good. Some people would never be poor after receiving such an amount since they will invest with it. But when the gambler has no idea about investment. These set of people can squander the money within a few years. It would be better for such people to accept payment in instalments. Spreading the payments over many years would help them avoid reckless spending.

I would prefer to get the payment in bulk since I can invest them is good areas. Keeping money in the bank is a waste of resources because fiat loses value over time.

[EluguHcman]

Both options are good. But if anything happens to the person like he died, will they continue to pay the guy family the money? But that also has disadvantages.

I will prefer to receive $450 million and pay the tax. If it is payment on installment, I will still pay the tax. I will prefer the lump sum. Both the two options are good.

Common $1 million is not a small amount money. If I receive $200 million, that is more than a life fortune for me.

Exactly, I so much like the sense of your approach on this matter.
In the case of instalment payments, that really sound good as it will be assumed that every year will be earning $1M which amount is even enough for a life changing and that sum will be continued for 30 years. What?

In the aspect of receiving the $450M too is dupe and preferable but that is if the payment of the  instalment will be breached if death occurs to the beneficiary.
So if we consider greeds of paying the higher tax rate, we can also consider the repercussion of choosing the other option.

[Obulis]

This is a very simple but hard decision to make. Installment of $20,000,000 after tax for 29 years and receiving $270,000,000 lump sum after tax of 40%. There are various reasons for making which ever decision. In the first place to make more money or to keep the value of this money is not by receiving it but by investment in a valued asset(s), and $20,000,000 yearly installment can give all that opportunity likewise receiving $270,000,000 lump sum. So I would just love to end it up with that company by receiving lump sum and start my investment journey like buying $100,000 worth of Bitcoin weekly for at least four years and few other investments.

[MRY]

I would take the prize at once. That is the best alternative. 29 years is a very long period of time and anything can happen meanwhile. There aren't any assurances they will keep paying you each month for that long. 450$ million - 40% taxes mean 270$ million. It's a very decent amount of money which you can make grow much more in 29 years than the amount of money you would receive from them monthly, especially taking inflation into consideration.

If you have a business or sector you can invest the lump sum in and it will bring good returns periodically, that will be good. Some people would never be poor after receiving such an amount since they will invest with it. But when the gambler has no idea about investment. These set of people can squander the money within a few years. It would be better for such people to accept payment in instalments. Spreading the payments over many years would help them avoid reckless spending.

I would prefer to get the payment in bulk since I can invest them is good areas. Keeping money in the bank is a waste of resources because fiat loses value over time.

The concurrent transfer of money opens up opportunities of capital development to maximum through productive sectors. This will only devalue purchasing power by leaving cash in a bank account, which will be inflated every year. Phased scheme saves a lot of money to the least financially literate individuals and would save a waste. Learning how to allocate assets is a major success factor to wealth.