How To Invest Lottery Winnings

Winning the lottery is probably one of the greatest dreams that many people have, especially in these economically trying times. Although winning the lottery is highly unlikely, here are some steps to help you make use of what money you have won in the lottery. With the right moves, you can really make the money work for you and you can start your early retirement.

  • Cash or time payments. First of all, consider whether you want to cash out all of your winnings, or if you want to be paid gradually, over time. By choosing to be paid gradually, you will get up to twice more money. However, you will not be able to invest the cash all at once. If you really want to invest, however, it is best to withdraw all of your money at the same time. This way, you can make use of the lump sum in any way that you like.
  • Consider taxes. If you happen to withdraw all of your winnings, one of the first things that you have to consider is your taxes. The taxes that you will pay for your winnings will be very high, and can be as much as a third of all of your winnings. This means that if you win a million dollars, in real life you will actually be able to use only approximately $ 666,000. This is still a lot of money, although not as much as you probably expected.
  • Bills and living expenses. After paying all of your taxes, you will need to consider your living expenses and all of the other bills that you need to pay. Take out a sheet of paper and compute how much you actually need in order to keep the house, pay the electricity, the water, the Internet and other subscriptions that you have. You will be amazed by how much you actually need to pay each year. Make sure that you deduct all of these, so that you will still have living expenses to work with once you start investing. This is especially important if you are planning on retiring early and quitting your job, and henceforth simply relying on your winnings to do the working for you.
  • Tax free options. Next, consider tax free investment options. Even in investment, there are ways that the government can tax you. Because of this, you should look for various tax deferred investment options. This way, bulk of your money will be saved from going into taxes. The first few years are especially important, since you are only working on your capital. When you have earned from your capital, this is the time where you can start investing your money in taxed investment options.
  • Asset classes. Finally, consider investing your money in a wide range of stock options. This way, you will not be susceptible to the collapse of any one company or industry. Never ever invest all of your money in just one company or in just one industry. The stock market and the investment scene are quite fickle. You do not want to be trapped in an industry that suddenly collapses.

With these steps in mind, you should be able to make your lottery winnings work for you through investment. With the correct investment moves, you can take your early retirement and start relaxing and living the life that you have always wanted.


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