We genuinely love lotteries and think they are fantastic-just look around our site to find evidence of that. However, there is also a sad aspect of lotteries: the fact that so many become financially free overnight, only to end up with less than they started with a few years later.
Unfortunately, this has been proven time and time again as we see lottery jackpot winners losing the plot and eventually filing for bankruptcy. However, this sad fate can easily be avoided in almost any case merely by using some wisdom when receiving your winnings. In this article, we will look at what you should do to if you win the lottery so that you can smartly protect your lottery winnings and continue benefitting from them long into the future-not for just a few years.
What Do You Mean by Smartly Protect My Winnings?
This may sound like a ridiculous question. However, there are many ways that you can attempt to protect your money-but only some of them are truly smart. Other ways that you may try and protect your money could lead you to financial ruin because they do not work to protect your winnings in the way that you initially expected them to. When this happens, you will usually be left with little to no money and almost no way to make your fortune back.
Conversely, there are many smart ways to protect your money that will not only ensure that you do not lose money unnecessarily but will also allow you to earn more of it by making your existing money work for you. These are the ways that we will be outlining below by combining the advice of a variety of financial experts and previous lottery jackpot winners.
#1: Get Professional Help
There is a strong possibility that you have heard this advice over and over again. However, there is an excellent reason that this advice keeps creeping up-it works. One of the very best (and first) things that you should do when winning a large jackpot amount is to get help. This help should ideally come in the form of a lawyer and a qualified financial advisor.
Having a lawyer on your side will help you be able to wisely deal with any legal technicalities that you may encounter either when claiming your winnings or when trying to use your winnings after they have been paid out. In addition to this, it is always good to have a lawyer on hand in case you get yourself into any kind of trouble.
More important than a lawyer, however, is a qualified financial advisor. Note that we said a qualified financial advisor. This does not mean your friends, family, or even your neighbour Susan. A qualified financial advisor will not only be able to help steer you in the right direction when you are making plans for what you want to spend your winnings on, but will also be useful in helping you avoid legal or financial pitfalls that you might otherwise be financially injured by.
#2: Learn to Say No
You may think that this is a rather strange thing to have listed so high on a list of things used to protect your lottery winnings. However, this has been reiterated by multiple financial experts-and for a simple reason. When becoming a lottery jackpot winner, you will automatically become the target of a number of people that will be looking for a handout. This could range from friends that you have not heard from in years to cousins that you did not even remember you had.
Each of these people will come forward expecting you to share your good fortune with them by giving them money, purchasing them items, or even sending them around the world on luxury vacations. In some cases, they may guilt you, blackmail you, or flat out tell you that you owe them money for something. The problem is that, while it may feel great sharing your wealth at first, doing this is not sustainable, and before you know it you will have spent more of your money than you could have imagined.
Therefore, it is important to learn to say no early on after receiving your winnings. Doing this may not gain you any friends, and in fact, could cause some rather nasty and uncomfortable situations-and even destroy some relationships you believed were unbreakable. However, it is a necessary part of trying to be smart about your winnings and will do wonders in terms of ensuring that you will be able to secure yourself, and even help those that you really want to, for a long time into the future.
#3: Know Thy Self
This may not sound like a way to smartly protect your lottery winnings but is actually a rather large part of ensuring that your winnings last. Many lottery winners do not take the time to process what their gigantic win means for and to them. This lack of understanding often leads to recklessness in terms of their winnings. The result of this is that they are soon left with almost no winnings and have to return to their lives as they were before the win-except in most cases even worse off financially.
Most financial experts agree that the best thing to do is take time to process your win and the way that it will affect your life-before you even come forward to claim your prize. Doing this without the money sitting in your bank account will allow you to reflect on what precisely this money means to you and whether you trust yourself with it. This especially is an important thing to think about before claiming your winnings because it will help you decide whether to claim your winnings in annuity payments or in a single cash lump sum.
Only once you have done this and are comfortable about your ability to manage yourself and your money do experts say you are truly ready to claim your prize. However, even after you have done so, the consensus is to again take time to think while the money sits in your bank account. During this time you can re-evaluate whether or not anything has changed.
#4: Don’t Be Too Risky
One of the biggest mistakes that lottery winners make is to try and make their money work too hard for them. They do this by investing in risky places and putting too much money into volatile situations that offer high rewards but even higher chances of losing everything.
This risk is entirely unnecessary if you have won a massive lottery jackpot and the only thing that you will effectively be doing is risking money-that you will probably not see a full return on-in an effort to make it big. The reason this is foolish is that, if you have won a lottery jackpot, then you have already achieved something incredible.
The smarter option than investing in risky assets is to put your money safely into safe investments that are low risk. These types of investments usually earn an annual interest rate of between three and five per cent. This may not seem like much, but five per cent of $10 million equates to $500,000 per year or around $42,000 per month. This large chunk of spending money can be earned while keeping your money in a safe place that holds minimal risk.
#5: Acquire Assets That Have Real Value
You may see the word assets above and immediately think that we are trying to justify purchasing a different car for each day of the week. Let us be clear-we are not. Things like luxury cars, while great to look at and even better to drive, are not things that can really be classified as real assets. Let us explain. Cars-especially luxury cars-have a high depreciation value. This means that as soon as you drive it off of the showroom floor, you have already lost thousands of dollars in terms of what you can resell the car for. This means that you may be thinking that you are investing in an asset, but if the need arises to sell the asset, you will be left short.
A smarter choice is investing in things that have long-term worth or resale value. This could include property, collectable items, or even rare art pieces that increase in value as time passes by. These items are things that not only retain their initial value-ensuring that even in a push, you will not really lose any of your initial investment-but also usually increase in value over time. This means that you will actually be earning money while owning them.
If you have just won a large amount on a lottery ticket, the furthest thing from your mind is probably to save your money. However, this is actually one of the best ways to ensure that you can protect your lottery winnings. As in ordinary life, it is vital to put money aside each month into savings that can be used either for emergencies, when you retire, or even for something that you want but can’t afford (not that this would likely be a problem in this scenario).
After winning the lottery, saving is still as relevant as before. And the best part about it is that you will no longer have a reason not to save. Realistically speaking, if you win the lottery at the age of 25, your winnings will need to last approximately 50 to 60 years into the future. The only real way to make absolutely certain that they will is to save some money each month by placing it away and committing to not touching it until you absolutely need to.
As we mentioned at the start of this article, there are many ways to protect your lottery winnings. Unfortunately, not all of them are very smart, and some of them are-dare we say-downright foolish. Luckily, like many wise lottery winners would tell you, there are also many ways that you can smartly protect your lottery winnings to make sure that you will be able to enjoy them for years to come.
However, it is up to you as the winner to identify these ways (hint: they are listed above) and put them into practice. Doing this will ensure that you will not become another lottery statistic like those jackpot winners that just threw their money away and then came back begging for more.