Imagine waking up in the morning, rubbing your eyes before getting out of bed, turning on the television and up pops the news. You turned on the TV at the perfect time, they are just about to reveal last nights lottery numbers. You hurry over to grab your ticket, still half asleep and routinely look from your ticket in your hand to the television set.
The numbers match, you have just won the lottery!
I know this story is too good to be true for most of us, but I for one can’t help but wonder what it would be like to win the lottery and what I would do with such a large sum. For fun, let’s say I won 5 million dollars at this weeks lottery ( I can only wish). I am well aware of the stories of past lottery winners going broke within 2 years. Let’s face it, there are a great number of people in this world who are not good at managing money. Some, are downright awful.
If I won 5 million dollars, I would put the following moves into action.
- $1,000,000 For Family and Friends– Yes, you read this correctly, I would give 1 million dollars to the people I care most about. Making others happy around me is a very rewarding experience in life and it makes the good deed more fulfilling. 80% would go to family and the remaining 20% would go to friends.
- $1,000,000 in High Dividend Paying Stocks – This might be considered risky but I am a buy and hold type of guy when it comes to investments. Setting up a DRIP plan will mean I will constantly gain wealth as all dividends will be reinvested which means the purchase of more stocks. Over time, I will hopefully be able to live off the passive income earned from the dividends alone without touching any of the initial investment.
- $500,000 For a New House – I would be really happy if I could get a house with a purchase value of $500,000. Especially since it would be mortgage free. I am not looking for something extra fancy just a pretty nice home, in a nice neighbourhood.
- $1,500,000 in Liquid Assets– This could be either a high interest savings account or something similar. The reason for this is for safety purposes. If I could get a savings account with interest earning 3.00%, I would be earning $30,000 in interest annually! Another reason I want to keep this amount in a high interest savings account is to give me options for investments in the future. The downside to this is the enormous taxes I would have to pay on an annual basis with so much of my money not in tax sheltered investments.
- $300,000 For Business Opportunities – This could be starting up my own business or become a stakeholder in smaller companies. I might also consider investing in real estate if the markets are decent and such an opportunity exists. I would also probably keep this in a relatively safe investment vehicle for quick and easy access.
- Remaining Money for my Goals and Passions– This will be donating to charities on a consistent basis, traveling with my fiance and maybe even starting my own charity organization. The point with this money would be to enjoy myself and feel good about life.
I am in no way a financial adviser or planner but I feel pretty good about where my money would be going. I would suggest that you try as much as possible to secure your winnings that you have not decided to give away to family friends and charities but to also enjoy your life and celebrate your rare victory.
I can only imagine what it would feel like to win the lottery and enjoy the pleasure of not having to work and be able to enjoy the fine things life has to offer. I think it is time for me to go buy a ticket.