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Financial Advice for Powerball Winners: What to Do After Hitting the Jackpot


CONGRATULATIONS!!!!!


You just won the $1.9 Billion Lottery!


Your heart is racing, your palms are sweaty, and you are hoarse from screaming around the house. Your life will be changed forever!


You can't help but think of all the things you are going to do with the money.


You are a billionaire!


You turn in your ticket and they ask you, "How do you want to receive your payment, in a lump sum or in annuity payments?"


Confused with the word annuity, you do what most individuals do...go with the lump sum.


But is this the best option?


You start to weigh the options:


  1. If you take the lump sum, you can get all the money upfront and don't have to wait 30 years.

  2. You will have the cash, so just in case you die, you could have enjoyed the money

  3. I don't trust them to hold my money for that long.

  4. If you take the annuity...what is an annuity again?

You have decided to take the lump sum!


And here we go down the same rabbit hole most lottery winners go down. They don't call it the Lottery Curse for nothing. There is a reason that a majority of lottery winners end up dead, broke, or depressed after winning the lottery.


I am going to break down why I believe that the lump sum is a poor decision and going to argue, if you are going to win the lottery to choose the annuity option.



Click below to hear the full episode:



What to do if you won the $1.9 billion lottery

Wed, Nov 09, 2022 1:01PM • 19:54

SUMMARY KEYWORDS

money, lottery, people, lump sum, ridgeway, podcast, financial advisor, payments, manage, large sum, curse, ab, wealth, wealth management, darndest thing, life, give, advisor, question, prepare

SPEAKERS

Alajahwon Ridgeway


Alajahwon Ridgeway 00:00

You know, a lot of these individuals think about all the money they're going to make and all the things they're going to buy, but they don't focus on their spirituality and how it is going to help them strengthen their relationship with God, as opposed to separating themselves from him. As Christians, we were taught to be good stewards over our tithing and giving to the less fortunate. But when it came to our own personal finances and investments, we are clueless what the Bible says, What does the Bible say about managing debt? leaving a legacy, investing, or even planning for retirement? We answered these and many other questions because we want to teach you how to be rich and righteous. This is your first time to the show, we want to say welcome, and you're coming back for another spiritual refill. Welcome back. I am Amy Ridgeway. And this is financial advisors say the darndest thing. Welcome back, my name is Avi Ridgeway, and I'm the host of financial advisors say the darndest things in my mom's favorite Christian financial advisor. And today, we're going to talk about the $1.9 billion lottery. But first let's start off with the scripture comes from Proverbs chapter nine, verse 11, for by me, your days will be multiplied, and yours will be added to your life. And I want you to keep this scripture in mind, because we are going to make reference to it later in the episode. But first, let me congratulate you on winning $1.9 billion. Well, sorta, because at this moment, your heart is probably racing, your palms are sweaty, and your horse from screaming around the house, you know, your life is going to be changed forever with this amount of money is everything that you pray for. Right? You know, you know, at this moment, you probably can't help it. But you're probably thinking about all the things you're going to buy all the problems that are going to be solved. But if you follow our podcasts, you know, that money only solves money problems, and they don't solve life's true problems. But we're gonna keep that in our back pocket. We won't go into that there's other episodes for that. But what we are going to turn our attention to, is that there's one main question that these lottery winners are asked when they win. And the question is, how do you want to receive your payments? And traditionally, you have two options, you can either take the lump sum, or you could take the annuity payments. Now, what do you choose? I think many winners will choose the lump sum, just highlight what you did. But I'm here to argue that that may not be the best way to receive your payments. I don't know if you've heard of the lottery curse. But basically what it is, is that winners of the lottery have large sums of money, right? Millions, and in this case, billions of dollars, find it difficult to live their life, because they've never had that sum of money before. And it's reasonable to understand because even science has proven that anything above 10% of our normal income causes anxiety, you know, have you ever gotten a bonus at work, and it's like, okay, I want to take the trip, okay, I'm gonna buy that car, okay, I'm gonna buy that house, you almost try to get rid of the money faster than when it came. And this is no different when it comes to lottery winnings. This is way more money than people are used to managing. And we're going to talk about that a little bit later. Because that plays a crucial role, and how we determine what to do with the asset. Now full disclosure to everybody out there, I do not believe in curses. So don't let the word curse for you. I do not believe by any stretch of the imagination, that there is a force that can curse me with wealth or to curse me to do things that I don't want to I think that is a cop out. Because we are responsible for our actions. And we are responsible for our choices. So the negative outcomes that come out of those choices, we are fully responsible for them. Okay. But with that said, with the tips I'm going to give you you will have a greater chance of surviving this quote unquote, lottery occurs. So if you win the lottery, I want you to do a few things. One, I don't want you to tell anybody. And for obvious reasons, if you can claim your winnings, anonymously, I want you to do it. In some states, you can't you have to give them your name. You have to be on TV. Some people have even gone as far as wearing to a Halloween mask to cover up their face so people don't know who they are. If you ever do that, don't be like some people make sure you cover up your hands too because I don't know people can identify you with your hands as well. But the more people that know you won the lottery, the more people will try to influence your decision. And in most cases, the decision will be in their best interest and not yours. And this goal for your family because money does some crazy things to people's intentions, it does some crazy things to relationship. So my tip number one is don't tell anyone. Tip number two is don't take the lump sum, unless you are 82 years old with a terminal illness, choose the payment options, it will give you the greatest flexibility, and it eliminates the risk of you losing all of your money in year one or year two or year three, we're going to talk more about the lump sum and a little bit. Number three is grow into your wealth. So I want you to spend money on personal development in therapy, this is going to give you the greatest probability and the greatest chances of actually surviving this windfall from the lottery. You know, with great power comes great responsibility, you will need to rely on your intuition and your intellect to navigate this world. And if you are not prepared, let me take a step back here, when you become a millionaire, is not necessarily the money because the money is just a reflection of the value in the hard work that you put in to become the person that you are. The reason that we admire people who are wealthy or in people who are successful, is not about the dollar amount in their pocket, because we have different respect for different people who have different wallet sizes, right? You may not respect someone who's a billionaire, but you may have great respect for somebody who's a millionaire. So it was not necessarily the dollar amount, but it's the person they have to become in order to acquire that amount of wealth. And if you do acquire that amount of wealth, you have some work to do. So you're almost putting the cart before the horse, right? You know, you work hard, and you get to reap the benefits. But now you're reaping the benefits. So now you need to go and put in the hard work, what I want you to do, I want you to be able to manage the assets, I want you to be responsible, I want you to have great mental health, where people can not manipulate you because you're going to get solicitor's, you're going to get family members, you're going to get people who are going to try to tell you to buy things that you don't really want to buy. And they're going to spend the money like it's theirs, I want to give you a bonus tip. So those are three of them, right. So don't tell anybody don't take the lump sum and then grow into your Well, I want to give you a bonus tip. If you ever win the lottery, if you ever win this 1.9 billion or anything, a little bit less than that, what I want you to do is call me. Now I'm just kidding, I'm just kidding, that level of money management is even outside of my expertise, $1.9 billion, I wouldn't know how to manage that money, what I would have to do, if you came to me and you said, AB I trust you. I love your show, I love what you're talking about, I love all the information that you give, I have $1.9 million, I want you to be my financial advisor, I would have to in that case, take my own advice. And the only thing I can do in that situation is to help you that an advisor that has experience on that level, but in that same vein, if you did trust me, then I would have to do the same thing I'm recommending to you, I would have to get the education, I would have to do the personal development. And the best part about this for both situations is that if you choose the interval payments, as we're going to talk about a little bit later, you're going to have time to do that you'll have 30 years to actually build up your money, manage acumen. And the same thing with me, if you came, I'm not saying you should come with me. But if you do decide, you know, give me three or four years, and I'll be happy to learn anything that I need to learn in order to service you the best way possible. So the reason, you know, I feel that there is a such thing as a lottery curse in the first place is that you are giving a person a sum of money that is traditionally reserved for those who earned it as I mentioned before, so if you take the millions of dollars from a self made millionaire, what's gonna happen, they're gonna be able to make it back. You know, they know how to make a million dollars, they already have the knowledge and expertise to create it. So just give them some time and they'll be right back on their feet. But if you take the millions of dollars from a lottery winner, you know, the only way they know how to get it back is to play the lottery again, right, basically just gambling. And that is not really a money managed strategy. But I don't want you to worry, there's still hope for you. And the hope is, as I alluded to earlier, the annuity payments. Now a lot of people don't know what an annuity is. But an annuity is basically just an equal interval of payments over a scheduled amount of time. So for the lottery is going to be 30 payments over 30 years dividing up your winnings accordingly. So if you take the payments over 30 years instead of the lump sum, this will give you as I said before the opportunity to grow into that person who can manage that type of money. You don't even if you, you know, worst case scenario, you blow the money the first year, you still have another 28 years, you know, and 28 chances to get it right. Also, by taking the payments, it allows you a chance to build a business. And yes, I did not miss B, a chance to build a business, because it was $1.9 billion, you must now operate like a business, you may not register as an LLC, you may not have 200 employees, but you now become the CEO of your family legacy. And that means getting the right people in the right seats. So your company doesn't go bankrupt, and it can actually thrive. So a couple of things that do suggest as far as his team building and building this business, as I said before, you don't want to have buku employees, you don't want to have a lot of employees. But what you do want to have is a lot of advisors from different areas of life, whether it's real estate, whether it's a state planning, so I would say you know, get a lawyer in the state lawyer and a personal one, hopefully, they're separate, not the same person. Because when you get money, sometimes you need to get a lawyer to watch a lawyer, same idea. You need to get an accountant, a certified public accountant, CPA, someone who was qualified to manage those assets can help you with tax preparation, things of that nature, then also a financial advisor is always who's going to help you put this plan into action, who's also going to invest this money for you. So it continues to grow, and that we allocate a certain portion into certain strategies in order to reduce your risk. And finally a doctor. Yeah, believe it or not, I do recommend doctors for the ultra rich. So if you have five to 10 million, maybe even 15 million, I do recommend having a doctor, you know, preferably one that's going to be on call, you know, if you're going to live a long enough life, to enjoy your money, you must have a doctor to ensure that you're reducing any risks that may jeopardize your life expectancy. And that goes back to our Scripture. Proverbs chapter nine, verse 11, for by me, your days will be multiplied, and yours will be added to your life. And we find this with a lot of recurs, we do not see these individuals finding meaning in their life, we find them purchasing things that only provide temporary happiness. And that's the problem. You know, if you went $1.9 billion, and you go on a spending spree, you're going to be broken. And that's why a majority of people in America right now are in debt, because they are the consumers. And they are NOT THE Producers. They're not producing anything. I mean, I've read a study that even if you spread all the assets in the world evenly to everybody, right, everybody has an equal amount over the next 10 to 15 years, all the money be right back into the one person's hands. And the reason is, is because a majority of individuals or consumers are not producers. So even if you have the money, where are you going to spend it, you're going to spend it with those who are producing. So when I talk about investing, you also want to invest in the Lord because God is going to extend your days, he is going to give you that remember, we talked about therapy, and that mental health, God is going to provide that for you God is wanting to be in your life, God is going to make sure you make those right decisions that are not going to lead you down the road of temptation, and the road of evil. You know, a lot of these individuals think about all the money they're going to make and all the things they're going to buy, but they don't focus on their spirituality and how it is going to help them strengthen their relationship with God. As opposed to separating themselves from you understand, if done correctly, over the next three to five years, you would have gained the experiences of managing the money, setting up a plan and working out the kinks, because we all are not perfect. You know, the first year is not going to be great. But if you combine that with your personal development, the therapy, the spirituality, and really deepening your relationship with God, you will be able to handle the emotional anxiety that comes with navigating this new territory and this new large sum of money. So this question I get pretty often is what happens if you die before the payments are done? You know, do you lose the rest of the money? And I think this is what a lot of people's fear is. I think that's why a lot of people choose the lump sum and the irony of it is people actually prepare this answer. You know, they go, Well, I'll just use a lump sum and they justify it and they don't even have the money yet but there's yeah more than lump sum and if I die, I don't want to lose all the money. I want to have all my money so I can do the things I want to do. And that is almost counterproductive. Because if you're assuming that with the money, you could do whatever that you want, you are also inferring that you can't do what you want now. And that's an unfortunate place to be because I want to empower my listener to let them know you can do anything you want right now. But what are you willing to trade off to get it. So when people say that I can do what I want, when I have this money, that means they don't want to trade anything that they're doing currently for that money. That is a sad mentality to be in, if you are an investor. And that is why I think it's imperative that you create this team of advisors that can facilitate that transfer, you know, setting up the proper accounts, making sure that we reduce tax liabilities, whether that's to qualify charitable donations or, or other tax strategies that we will come up at that point. But I also want you to keep in mind that you don't want your beneficiaries to kind of fall into the same curves. So setting up a trust will give you the flexibility to give them incremental payments, and to give them time to grow into themselves. So they can be just as successful as you, you know, if you are preparing yourself, by making sure that payments come every year and giving yourself 30 years to spend it, then you want to do the same thing with your children, there's an old saying that if you give an alcoholic $1, he may drink for a day. But if you give an alcoholic $200, he may drink himself to death. And that's the same thing we see with some of these resources. If we just give them a little bit, they can kind of enjoy themselves, you know, they can have a pattern, they can learn, they can grow, they can make mistakes, but when we've dumped a large sum on them, they can get just as overwhelmed as we have. So we want to make sure that we prepare them to my last thought. My last thought here is as always, we want to keep charitable giving on top of our minds. And with multiple payments. This will empower you or give you the ability to build trust with those in need. So the key takeaway I want you to have today is that you don't have to be a billionaire to start setting your family up for success. You know, the numbers may be smaller in your current situation, but the intentions are still going to be the same. The intentions are to prepare yourself and the next generation for success. You know, don't curse your children with a $7 million lump sum from your retirement account, when you pass, set them up for success by creating a plan. And also, when you give them the money, make sure that you give them the money management skills to go with it. You know, when someone inherits a lot of money that they are not used to managing it doesn't matter if it's in the form of a lottery ticket, or a family member, they will struggle if you don't prepare them. And if you want to know what you would receive in your state with the different payment options, I'll try to leave a link in the description of a lottery calculator you can pretty much as Google lottery calculator, you know, punch in the number and then select your state. It'll give you an idea of the difference of taking the lump sum versus the annuity payments and what you would get but at $1.9 billion is going to be more than you will get anyway. As always, I do want you to check out our website, www dot ABR wealth management for more resources and if you need some guidance for your future, I want you to schedule a consultation information is going to be after this podcast. If you have any questions, comments or concerns you can always reach out to us your feedback is always encouraged. This is it from us. My name is Avi Ridgeway and I'll see you on the other side of your blessing. I hope that you've been blessed as always, this episode was created by AB Ridgeway owner of AB Ridgeway wealth management, a virtual and in person fee only advisor that believes that financial advice should have gotten in it. If you need help figuring out your finances, feel free to reach out to us at 337-414-3686 or visit our website at WWW dot ABR wealth management.com and schedule a free consultation. new episodes are available every Friday so be sure to subscribe. You can also listen to our podcast on your favorite platforms, Amazon Music, Spotify, Google podcasts, Apple podcasts, and more or simply visit our website and join our family. I am AB Ridgeway and I'll see you on the other side of your blessing Alajahwon. Ridgeway is an investment advisor representative and owner of AB Ridgeway Wealth Management LLC, a registered investment advisor which produces a podcast show and makes it available on his website and through other distribution channels allows us to join any guests on the podcast providing their own views and opinion are not necessarily the views and opinions of AB Ridgeway Wealth Management at them on podcast should be construed as solicitation or offer or recommendation to buy or sell any specific security investment advisory services are only provides investors will become AB Ridgeway Wealth Management client pursuant to a written Investment Management Agreement. Clients of AB Ridgeway wealth management may hold positions and securities discussed in the podcast. Past performance is no guarantee of future results. All investments involve risk and may lose money. financial advisors say the darndest thing podcast is for informational purposes only and should not be relied on for any investment decisions. Instead of please consult a financial advisor, accountant attorney and or conduct your own due diligence







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