Financial Freedom Insider


Financial Advice for Lottery Winners

Financial Advice for Lottery Winners
January 19
14:37 2016

In lieu of the recent Powerball excitement, financial gurus Barbara Corcoran and Kevin O’Leary of Shark Tank bring us very specific advice for lottery winners.

“You don’t spend a dime when you win this,” said O’Leary last week on Good Morning America. Corcoran, often his rival on the show, agreed. New millionaires or billionaires should hold their money close and even consider disappearing for a few days. Lottery experts were shocked when one of the recent winners flew to New York before the ticket had been cashed in to appear on NBC’s Today Show.

Corcoran, founder of The Corcoran Group, became a millionaire overnight when she sold her real estate business in 2001 for $66 million. She paid all taxes immediately and then put the rest into a checking account. “What it gave me was breathing space,” she said. “It gave me time to really assess what I wanted to do with the money and to spend it and invest it wisely. You’ve got to wait and take a breath and do something smart.”

O’Leary explained that of the $1.6 billion jackpot, a single winner would receive only $800 million if they took all of it at once. After taxes, that number shrinks to $400 million. “If you’re wise about this, you’ll take it and put it into three or four large financial institutions.”

John Robinson, the winner from Tennessee who made the dangerous trip to New York with his winning ticket, made the decision to take $328 million at once rather than accept 30 annual payments that would have brought his sum up to more than half a billion.

“If you invest in government bonds, which are assumed risk-free, and a few triple-A credits from corporations, you’ll make about 4% a month,” explains O’Leary. “That’s $600,000 a month after tax for the rest of your life. The key is, do not spend the principle. Don’t let anybody tell you they need a check from you. Just put it in a bank and don’t spend anything until the first $600,000 comes in.”

When it comes to helping out family and friends, Corcoran believes lottery winners should forward all questions to an accountant. “With every $10,000 problem that people came to me with, I said, ‘Hey, if it’s okay with my accountant it’s okay with me. Here’s his phone number.’” That way, the accountant became the bad guy and Corcoran was safe.

O’Leary has a different opinion: “When a family member comes, and after the first month’s $600,000 comes in, you say to them, ‘I am happy to give you money. It’s not going to be a loan. It’s a gift, but never, ever ask me again.’ That’s the key because families will keep coming. Give everybody a piece when you decide, off the first month’s principle, but never, ever again.”

This month’s record-shattering $1.6 billion Powerball jackpot will be split between three winners – each one walking away with about $328 million after taxes. The odds of winning were 1 in 292.2 million.


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April Kuhlman

April Kuhlman

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