There’s a chance you could be the next jackpot lottery winner. But you’ll need to plan ahead if you’re going to spend the money. A good financial advisor can help you get started on the right path. They can also guide you in choosing investments that are suited to your risk tolerance. The best way to invest is with a low-risk investment option like bonds, mutual funds, or annuities. They can also provide you with a retirement plan and other benefits.
Lottery organizers know that eye-popping jackpots can drive ticket sales and attract attention. So they have been making it harder and harder to win the top prize for decades, says Victor Matheson, an economics professor at the College of the Holy Cross. The reason is simple: as a jackpot grows, more people buy tickets, and the chances of winning increase proportionally with ticket purchases. This is why you should avoid selecting numbers based on significant dates or events such as your birthday. If you do, you’ll likely have to split the prize with others. Instead, choose numbers from 1 to 31 that are less common.
The first thing you should do if you’re the winner of a large lottery jackpot is to set up an emergency fund. It should contain about a year’s salary, and you should also save for retirement. Then you should think about investing your remaining assets. But beware of people trying to sell you investment advice. They will try to entice you with fanciful and high-risk investments that will probably lose you a substantial amount of money.
Another important step is to determine whether you want to receive your winnings as a lump sum or in annual payments. Most winners opt for the latter, because it is tax-efficient. The New York Lottery, for example, gives its jackpot winners an option to receive a lump sum or in a series of yearly payments. If you choose the yearly payment option, you’ll receive the first installment — 2.5 percent of the total jackpot — two weeks after you submit your winning ticket. (Some taxes will be withheld from the lump sum.)
You can also invest a portion of your lottery winnings in stocks or real estate. However, be aware that it may take a while for your money to grow. Moreover, it is wise to consult with a financial planner before buying real estate or stock. In addition to that, you should consider donating some of your winnings to charities. This will not only uplift you, but it will also give you some tax benefits.
Many people believe that lottery winners are greedy and selfish, but this is not necessarily true. There are some who actually care about society and want to uplift those in need. In fact, some of the biggest lottery winners have even donated a part of their winnings to charities or organizations. This is an excellent way to enjoy some tax advantages while helping others at the same time.