7 On Your Side has tips on how to handle Powerball winnings
If you bought a Powerball ticket you've likely dreamed of how you're going to spend your $1.5 billion. 7 On Your Side's Michael Finney has tips on how to handle all that money.
Stories unfortunately are plentiful of athletes and entertainers who went from being multi-millionaires to filing for bankruptcy. Here's what you need to know to avoid becoming one of those statistics.
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Rapper MC Hammer shot to fame and fortune with his hit "U Can't Touch This." Handling all that money proved difficult and he was forced into bankruptcy
If you're lucky enough to have the Powerballs bounce your way, your first decision is to collect your money in a lump sum, or over 20 years. Most people who spoke with 7 On Your Side said they'd prefer getting the money all at once.
"Take it in one lump sum," said David Tsang of San Francisco.
"One lump sum," Patrick Lee said.
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We then took the question to a senior vice president of investments at Wells Fargo.
"If you're not comfortable taking the lump sum and you're afraid you're going to blow it all, I would absolutely consider taking the stream of payments," said Wells Fargo president Bruce Lin.
Bruce Lin's preferred choice is to take the lump sum and invest it.
Put your money in conservative holdings such as certificates of deposit and tax free municipal bonds. Aim for a five percent return on your investment including any tax savings.
"Certainly when you have that much money, the key is to stay rich," Lin said.
That doesn't mean you can't have fun. Lin suggests a new car, or even a home might be in your future.
"I think I'd buy a nice big penthouse in San Francisco, top floor," said Dennis Mulvihill of Petaluma.
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Get together with an estate attorney and set aside money for your heirs. A financial adviser can even help with distributing some to charities, even family and friends with special needs.
Lin says going into hiding for a few months after winning might be advisable.
"My recommendation is really take your time. Take that six months and think about things. Really plan out what's meaningful to your life," Lin said.
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MC Hammer was able to rebound and is now CEO of his own record label.
The Powerball will automatically deduct your federal taxes from your winnings. But you'll need to set aside any state and local taxes you'll have to pay. MC Hammer was able to rebound and is now CEO of his own record label.
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