Your Site Wins $1 Million in a Contest - What Do You Buy?
- Thread starter DRE
- Start date
DBA
Well-known member
No I was saying that with those numbers (6% return/3% inflation/$63k payout) it wouldn't work as you'd be out of money halfway to the 50 years. Fiddle with the numbers (lower payout/higher return) and anything is possible.
[Not directed at you @Sheldon or anyone else]
Go look at lottery winners and how many of them are broke after only a few years. Giving someone a larger chunk of money doesn't also give them the money savvy needed to make it work for you. A lot of people (this thread is proof) will go pay cash for a house and buy other large dollar items without taking into account the additional costs needed to maintain said items. Take a house for example, a lot of people (me included) would go looking for a new house and in most cases it'll be too big.
Which brings me to this example, a lot of people probably wouldn't look at the numbers between paying cash or getting financing. Sure you could go cash off a $250,000 house and not pay the bank interest. Or you could finance it and invest the $250,000 instead. $250,000 financed for 30 years at 4.5% interest will cost you $206,016 in interest. If you invest that $250,000, that you didn't use to buy the house, at the same 4.5% (very conservative rate), that $250k will turn into $768,000 (after taxes) in 30 years. Which would mean you'd have ~$312,000 more in your pocket after 30 years.
jasetaro
Well-known member
He's not the only one, it happens more often than people realize.
DBA
Well-known member
I'd being willing to bet a $1 that this happens to more than half of the sub $10 million winners.
While definitely possible, I think it'd be kind of hard to blow $200+ million. haha
Code Monkey
Well-known member
I would retire. I could retire right now but I would get half what I am making so no go. But with a $million.....
jasetaro
Well-known member
I saw some stats on lottery winners a few years, I can't exact numbers, but you're not far off. I had a buddy of mine come into a large ($5+ million) inheritance a several years ago... he died broke.I'd being willing to bet a $1 that this happens to more than half of the sub $10 million winners.
He made the mistake almost everyone who becomes suddenly "rich" does, he didn't hire lawyer and financial planner to say no... not only all the friends and relatives whom suddenly come crawling out of the woodwork asking for money, but to him. When he decided he need a new computer he didn't one; he bought 5. New car; he bought 3... and so on and so forth unit he end-up living like a hermit in a double-wide hiding from bill collectors.
whynot
Well-known member
One of my ex-colleague won 2 million.
He's been given "good" advice how to invest it.
Invested in property development.
To increase the income on the long term he took out a loan to increase the investment.
The property developer went bankrupt, my ex-colleague followed him.
DBA
Well-known member
It takes discipline and some money savvy to amass a wealth over $1 million. Giving someone a $1 million in one lump, that they didn't actually work for/amass, is a recipe for disaster. Remember reading an article about what to do if you win/acquire a large sum of money and one thing they recommended is taking 10% and blowing it on whatever you please. Helps control that itch so that you can save/invest most of the rest.
The crazy thing though is that we can sit here and talk numbers all day but if you're the one that just won $1 million, logic goes out the window. Haha
DBA
Well-known member
Never put all your "eggs" in one basket, that's investing 101...
shawn
Well-known member
Sure you can. You're just not thinking creatively enough. Your burn rate in a tropical, third-worldish country could easily be $1-2k/mo. And that's living comfortably.
DBA
Well-known member
Given the choice who wants to live in a third world country? Tropical or otherwise.
Code Monkey
Well-known member
Many people go out and buy a really expensive house without thinking about how they are going to pay that really expensive property tax every year for the rest of their life. Or how they are going to pay that really expensive maintenance cost for the rest of their life.
If I ever win I will go into hiding for awhile.
If I ever win I will go into hiding for awhile.
DBA
Well-known member
I said live, not travel through until you're bored. Heck I'd love to travel the world, some third world countries included, just not live there.
jasetaro
Well-known member
Genesis
Right, well, between taxes and all the stuff that needs or is going to need fixing or replacing around here over the next few years... that million bucks is already spent.
True that. I'd love to think I'd invest the the theoretical prize money, but the truth is I've got a roof that's going need replacing soon, a septic system that's long in the tooth, and a kitchen and bathrooms that could use an upgrade. So big chunk of it would go towards those things, and then there's the furniture in the family which is pretty long in the tooth... and so is the TV, and my car... and...
Right, well, between taxes and all the stuff that needs or is going to need fixing or replacing around here over the next few years... that million bucks is already spent.
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whynot
Well-known member
Right, well, between taxes and all the stuff that needs or is going to need fixing or replacing around here over the next few years... that million bucks is already spent.
Don't worry. The news would come soon:
"Your Site Wins $1 Million in a Contest"
