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Investor Education Centre > Income Producing Investments > Invest Lotto Winnings: Where to start so you don’t get ripped off

Invest Lotto Winnings: Where to start so you don’t get ripped off

Winning big on a major lottery like Oz Lotto or Saturday Lotto is a life-changing experience. But is that change always for the better? It seems like there are just too many stories in the news about people who have won the lottery and been ripped off, whether by shady business people, by strangers looking for handouts, or even by their own family. So how do you avoid being taken advantage of if you’ve recently won the lottery?

Step One: Protect Your Privacy

Most lotteries reserve the right to publish your full name if you win, meaning that it’s relatively easy for companies and fraudsters alike to figure out who you are and where you live, unless you take appropriate steps to protect yourself. This also extends to immediate family. You may wish to deactivate your social media accounts for the time being, or refrain from making any new posts.

Hiring an attorney is an important step. This is a professional who can help you claim the ticket under the name of a trust or corporation, so that your real name isn’t immediately published. This will give you a head start on the media, but this head start won’t last forever. Your attorney should also be able to recommend the right types of individuals (accountants, media relations representatives, etc.) to help you live the life you’d like to lead after winning the lottery.

Step Two: Secure Your Own Financial Future

It is absolutely critical that you have a plan for how you intend to use your new-found funds. That plan starts with securing your financial future, so that you never need to work again unless you choose to. One great option is to invest a portion of the money with a well-known, reputable firm and live off the interest, which can be substantial.

For example, if you win $15 million and invest $10 million of that in a safe, reliable investment that pays 3% interest, you can enjoy a salary of $300,000 per year without ever touching your principal. If you are smart and shop around you can make your money work even harder than this, with it possible to find investment opportunities paying 4%, 5% or more. This is because your new found wealth is likely to qualify you as a Wholesale investor, opening up new doors and opportunities not available to regular Retail investors. 

By not investing the entirety of your winnings this leaves the remaining portion for family assistance and charitable donations which, as we’ll see, make up another major element of your financial planning.

Step Three: Have a Plan for Handouts

It’s common for those who have won the lottery to want to help out their family members, friends or a favourite charity. Fail to properly prepare, though, and these handouts can add up quickly, to the point where you don’t have enough money left to do the things you want to do for yourself.

With a bit of preparation and the help of a financial advisor, you can decide on a plan for how much to give to each family member, and who to include on that list. Be prepared for any family members not included on the list (including that strange fourth cousin twice removed you didn’t know you had) to reach out asking for money as well; a lawyer can advise how best to handle those scenarios, and the potential jealousy they can spark.

Conclusion

Winning the lottery is an exhilarating thing to go through, but it can also cause a great deal of stress if you don’t prepare appropriately before claiming your ticket. By following the steps outlined this article, you’ll give yourself a better chance of dealing with key decisions with a level head and a rational perspective. Remember: first and foremost, you need to protect yourself and your immediate family’s financial future.

Mayfair 101 established IPO Wealth to specifically cater for High Net Worth investors seeking income-producing investments.  For more information visit www.ipowealth.com.au

Disclaimer

This website contains general information only and is not intended to provide any person with financial advice. It does not take into account any person's (or class of persons) investment objectives, financial situation or particular needs, and should not be used as the basis for making investments.

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