Should I take the lump sum or yearly payments and why??
2007-10-15 19:27:59 · 7 answers · asked by Michelle T 1 in Business & Finance ➔ Personal Finance
yearly, youll get more. the payments are still pretty big anyway
2007-10-15 19:31:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Lump sum.
Scenario 1; Payments: If you take into consideration that the American Dollar is falling in value then you will know that taking the payments over a 20 year time frame would be stupid. You will be receiving the same amount each month but the CPI (Consumer Price Index) will have risen dramatically over a few years. Meaning you will be spending more money on the costs of living while you are still getting payed the same amount.
Scenario 2; Lump Sum: If you take the, lets say $400000, lump sum as apposed to the, lets say $1000000, payment plan over 20 years then you will be able to invest it in whatever you please. Saying you invest your money in the right place and earn a 10% interest rate over the 20 years then you can calculate, using the simple interest formula, that you would have a income almost 3x the amount you would receive on the payment plan.
So basically saying you are good with money, would you rather have 1 million dollars in 20 years or 3 million dollars?
2007-10-16 03:11:49 · answer #2 · answered by Brad 1 · 0⤊ 0⤋
Lump sum. Most lottery winners you hear about end up broke, dead, or in jail anyway, so you might as well take it all and enjoy it before the money corrupts you.
Actually, the payments are based upon taking the lump sum and investing it at x % and then paying out a part of the total principle+interest annually. Just take the lump sum and invest it as you wish. You can probably beat the states %.
2007-10-16 02:33:09 · answer #3 · answered by Mike 4 · 0⤊ 0⤋
I personally would take the lump sum, for one reason, If you were to die and you had Children, you could not give the money to them if you get the annual payments, but if you have the whole lump sum you can invest it, and make sure your kids are taken care of. You wouldn't receive the whole lottery winning amount if you take the lump sum, but it also beats paying taxes on it every year, you pay once the rest is yours.... Oh yeah, and if you win the lottery, ARE YOU GONNA SHARE??? LOL
2007-10-16 02:38:00 · answer #4 · answered by Angi 2 · 1⤊ 0⤋
If I won the lottery, I would be dead in a year. That sounds morbid, but I would party my *** off, travel the planet, and die of alcoholism.
It's true - thats why I don't play the lottery.
2007-10-16 02:35:55 · answer #5 · answered by Toilet Finger! 2 · 0⤊ 0⤋
I want the lump sum.
" SHOW ME THE MONEY ".
2007-10-16 02:37:01 · answer #6 · answered by elliebear 7 · 1⤊ 0⤋
id take it all
2007-10-16 02:37:30 · answer #7 · answered by Anonymous · 1⤊ 0⤋