Each year in Australia there are about 10 mega draw lotteries. These are the ones where the first division prize is more money than God.
Last night one such draw for $40million took place and was one by a single individual who will now have more ‘friends’ than God.
Mostly people who win these prizes are broke again in a short period of time. They may have some trinkets and some cars and some property but generally the lion share has been pissed up against a wall or given to family and friends.
The only way IMHO to act when something like this comes your way is to do nothing.
My emergency plan for what to do when a multi multi million dollar lottery prize comes my way:
- As the money doesn’t actually arrive for a couple of weeks (Police checks and anti-fraud test are conducted) it’s planning time.
- Create a team: lawyer, accountant, financial planners.
- Have the lawyer and accountant create a charity.
- Get the financial planners to start looking at investment options. Step one here is to open a margin account offset against 100% of the winnings. You’ll see why this is important later.
- The aim of this plan is give away 100% of the interest earned every year. But remember, we now have two piles of cash; the winnings and the margin loan.
- Invest both, not conservatively and not outrageously risky either. A little risk is good. A lot of risk is heart attack city.
- Now create another team of advisors from business, charity, science and the arts. Three from each area are required.
- Promote the charity and ask for submissions from the public as to where the money should go. Remember, it’s just the interest that’s being given away not the principle so you can do this every year.
- Have your team review all submissions and vote on two winning entries from each category.
- The president of the charity can award an overall winner to one of the eight semi finalists.
- Each winning submission (2 from each of 4 categories being 8 in total) receive 1/10th of the interest earned for that year. Another 1/10 is given as the presidents prize. 1/10 is reinvested so that the principal always grows so each year there should be even more money to give away.
- Eg assuming a lacklustre 10% return on $40mil each recipient would get about $400,000 dollars. The next year they would get $410,000. SImple figure only and counting taxes or fees etc.
- The other $40mil margin loan is earning interest at the same rate but costing 5% in interest making a gross return of $2million pa. Who couldn’t live, very fucking happily, on $2M pa and have given away over $3.6M to worthy recipients.
Australia