If you play the lottery, you are financially lucky, depending on the one you choose to play. Assuming you get into a stadium filled to capacity with about 100,000 people and for the price paid for the ticket, you were allowed into a lottery to try and win a brand new car. It would mean that your odds of winning would be 1 in 100,000.
As they read the ticket numbers, would your heart be racing, or would you know for a fact that you will win? To increase your odds of winning, you would perhaps fill the stadium with about 800 more people and have them all draw for that one car. The truth is, someone has to win the lottery, and the only way to increase your chances is by being in it. You also need to identify the more common lotteries. Lottoland lets you compare different international lotteries.
Increase your Odds
The rule of the game dictates that you do not win in a lottery by buying too many tickets. However, you can purchase several tickets for the same drawing. Two tickets, for instance, could increase your odds. Understand that you can never buy enough tickets to win in a draw unless you are the only person buying the tickets.
Although the chances of winning are remote, it does not mean that people should stop playing. In the US, about 57 percent of the players spend close to $80 billion to try and win in a span of one year. Each time a lottery is introduced, the number of players who engage in gambling increases by 40 percent. Lottery tickets are a great way of getting rich for some people. To those with little money, however, buying many lottery tickets can be a major income drainer.
Should you Invest?
Did you know that lottery winners are ten times more likely to be declared bankrupt than non-winners? This is what happens when you make bad financial decisions after winning. Once you win, begin by making sure that you are the real owner(winner) of the lottery ticket by signing it on the spot. You could secure it in a bank safe deposit box.
Also, understand that most winning tickets expire, so be careful to prepare your financial plan in good time. It is also crucial that you talk to a financial planner and also remain anonymous. Any bankrupt lottery winner will tell you that the biggest mistake they ever did was to go public soon after winning. Going public means, you may encounter beneficiaries who ask for handouts or get invites to fake business partnerships.
It is important to diversify your winnings to preserve your capital. That would include allocating it to private market stocks, real estate, and private equity. If you spent $5 every week, by the close of the year, you would have spent $260. Because the stock market depreciates, you may want to try a better estimate.
Lump-Sum or Annuity?
In case the odds are in your favor, and you happen to win six digits, you will be faced with a lot of decisions to make. The first one is on how to receive funds and how to spend. Your check may be written for the whole amount, or you could choose to accept it in the form of an annuity. If you choose an annuity, it means you will receive your money over a series of annual payments, whereas accepting lump sum means you receive your cash in a single cash transfer. Annual payments are completed over a series of the set years. This means that if the beneficiary dies, the payments can be bequeathed to someone else.
Most lottery winners choose to accept the full amount in one go to get full access to their funds. If you receive your funds over several years, you could be in a better income tax position. In case you choose this option, your winnings would be taken by the government for investment in Treasury bonds.
Normally, whenever you invest, you are required to pay taxes. However, when the government invests for you, it is done for free. It would mean being awarded a certain amount on your winnings each month and earning investment income. An annual form of payment would also save you from making poor financial decisions.
Should you ever buy a lottery ticket and win big, be careful to work with a financial advisor, CPA, and a litigator to help you determine your best financial option.
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Image source: Mike Mozart.