$1.3 Billion Jackpot - How would you invest it?

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corner559
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$1.3 Billion Jackpot - How would you invest it?

Post by corner559 » Mon Jan 11, 2016 2:52 am

As a Boglehead, how would you invest a 1.3 billion dollar windfall after all the taxes had been taken out?

Goal33
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Goal33 » Mon Jan 11, 2016 2:55 am

60/40 stock/bonds
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Phineas J. Whoopee
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Phineas J. Whoopee » Mon Jan 11, 2016 3:09 am

100% US onion futures.
PJW

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JoMoney
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by JoMoney » Mon Jan 11, 2016 5:09 am

Invest? I'd be trying to figure out how in the world I could possibly spend it all before I died...
I suppose after trying to do the "Brewster's Millions" thing a few times, I might get sick of it and toss a few hundred mill' in a S&P500 fund and then get back to work trying to figure out how best to spend the rest before I die. Maybe talk to Bill and Melinda Gates to see about some ideas about how best to 'invest' in the rest of humanity.
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Drewman
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Drewman » Mon Jan 11, 2016 5:42 am

Well for 6 months I would probably sit on it after paying off some family debt to take time to learn about what to do with it all.

After 6 months I would have learned enough about foundations to create a foundation.

From there on my goal in life would probably be to work with the foundation to figure out how to give all the money away - heroin recovery programs, find the poorest schools in the USA,...

I would try to meet Jack Bogle and some Vanguard heads to seek guidance with investing the foundations funds.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by HoosierJim » Mon Jan 11, 2016 6:31 am

If I won, I would immediately create the following new Boglehead threads....


- WON over A BILLION, DO I HAVE ENOUGH TO RETIRE?

- WON over A BILLION, PLEASE HELP ME DECIDE WHEN TO TAKE SOCIAL SECURITY?

- WON over A BILLION, 3 FUNDS OR TARGET PORTFOLIO?

- WON over A BILLION, HELP ME LOWER MY TAXES?

- WON over A BILLION, I AM A DOCTOR AND NEED SPECIAL HELP?

- WON over A BILLION, TILT OR NO TILT?

- WON over A BILLION, IS 2% SWR SAFE?

- WON over A BILLION - WWTD - WHAT WOULD TAYLOR DO?
Last edited by HoosierJim on Mon Jan 11, 2016 7:03 am, edited 1 time in total.

trueblueky
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by trueblueky » Mon Jan 11, 2016 6:33 am

I would DCA, by taking the annuity rather than the lump sum. You don't get the whole $1.3B with lump sum. Then I'd only need to figure out how to invest about $25M annually after taxes. I might mess that up the first year,but would eventually figure it out.

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David Jay
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by David Jay » Mon Jan 11, 2016 7:16 am

1. Take the Lump Sum, perhaps 600(?) million
2. Put 540 million in a donor-advised charitable trust
3. Keep 60 mil - 33 mil after taxes.
4. I can get by with a 2% SWR. :happy
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Flashes1
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Flashes1 » Mon Jan 11, 2016 7:37 am

Hookers and cocaine.

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David Jay
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by David Jay » Mon Jan 11, 2016 7:43 am

HoosierJim wrote:If I won, I would immediately create the following new Boglehead threads....


- WON over A BILLION, DO I HAVE ENOUGH TO RETIRE?

- WON over A BILLION, PLEASE HELP ME DECIDE WHEN TO TAKE SOCIAL SECURITY?

- WON over A BILLION, 3 FUNDS OR TARGET PORTFOLIO?

- WON over A BILLION, HELP ME LOWER MY TAXES?

- WON over A BILLION, I AM A DOCTOR AND NEED SPECIAL HELP?

- WON over A BILLION, TILT OR NO TILT?

- WON over A BILLION, IS 2% SWR SAFE?

- WON over A BILLION - WWTD - WHAT WOULD TAYLOR DO?
You're a hoot, Jim!
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by jpelder » Mon Jan 11, 2016 8:13 am

Flashes1 wrote:Hookers and cocaine.
Somebody's always gotta be that guy

Take the lump sum of $600 million or so, keep $10 million or so (after taxes), invested 50-30-20 in muni bonds, total stock market, and total international stock market. Start a foundation with the rest and make supporting all of my favorite causes my day job

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by joebh » Mon Jan 11, 2016 8:33 am

corner559 wrote:As a Boglehead, how would you invest a 1.3 billion dollar windfall after all the taxes had been taken out?
I'd pay someone to figure that out for me, while I and my family enjoyed the rest of our lives.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by jhfenton » Mon Jan 11, 2016 8:50 am

I'd take the lump sum. I'd find an attorney more current than myself in this area, and I'd set up some trusts to provide for my father, my in-laws, my kids, my sister, my brother-in-law, our nieces and nephews, their descendants, and one or more charities. I used to practice in this area, but not in 15 years and never dealing with that much money and that many different family members. Different pieces would undoubtedly be invested differently, but overall, I'd expect it to be around the classic 60/40 allocation.

And as joebh said, I would have someone manage it for us.

BlackStrat
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by BlackStrat » Mon Jan 11, 2016 9:20 am

I'd also spend most of it on booze and wimmenz.

...the rest I'd probably just waste.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by sawhorse » Mon Jan 11, 2016 9:44 am

I'd take the lump sum (I don't want to be in a situation, faced by some who chose annual payments, of the state not paying them due to budget problems). Then I'd put money into offshore trusts in order to protect it from lawsuits. I'd use most of it to support causes and organizations important to me, many of which I currently support on a small scale.

Investing would be low down on my priorities. There would be much more important things than growing it even further.

In terms of spending, there would probably be an initial period of highly increased spending and then a sharp fall and plateau. Once you've got the new house and all, the ongoing expenses wouldn't make as much a difference.

The major additional ongoing expense would be security. For this reason, I'm not sure I want to win. I'd rather win a much smaller jackpot. As a member said on another thread, the money she can manage. It's the ongoing kidnapping and ransom concerns that she can't manage.
Last edited by sawhorse on Mon Jan 11, 2016 10:11 am, edited 1 time in total.

simmias
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by simmias » Mon Jan 11, 2016 9:52 am

I would invest half of it in low risk mutual funds and then take the other half over to my friend Asadulah who works in securities.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by mattshwink » Mon Jan 11, 2016 10:02 am

I'd take the annuity.

Roughly 20 million after taxes each year (40 million per year annuity).

Tithe: 10% (4 million)
8 million would go to short term saving/spending (10-20 CDs at $100,000 each). The rest I would have to think about how to spend. Probably give 14 close family members $14,000 each per year ($196,000). The rest I would have to figure out how to spend, but maybe a vacation home or two, personal chef 1-2 days a week. A good bit of travel.

The other 8 million would be invested 60/40.

I'd follow this pattern for 30 years. If I had enough spending money for the year, I would invest all 16 million for that year.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by BolderBoy » Mon Jan 11, 2016 10:02 am

Phineas J. Whoopee wrote:100% US onion futures.
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by t3chiman » Mon Jan 11, 2016 10:17 am

corner559 wrote:... how would you invest a 1.3 billion dollar windfall ....
The general strategy is to establish an LLC that manages investments and trusts. Have the corp receive the windfall. Then, hire experts to draw up and fund trusts for your relatives. You would be president and chairman; your spouse would be VP. Pay yourself a modest 6-figure salary. Schedule your board meetings for exotic resort destinations. Travel a lot, scouting out potential investment ideas. Some of these trips may involve meeting potential customers or clients at luxury resorts. Luxury cars, maybe access to a Beech King Air turboprop, would complete the executive profile. All perfectly deductible business expenses (consult your tax attorney to be sure).
As for what the corp would invest in: Vanguard Health Care, Vanguard Energy, Vanguard Consumer Staples come to mind. Developing a reputation as a generous philanthropist who sponsors local technology efforts might bring you some satisfaction.
HTH

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by S&L1940 » Mon Jan 11, 2016 10:24 am

55/45
with the 45 being Int Treasury, one can not be too careful how to manage and preserve assets
I presume when not taking lump sum that the payout would continue for my heirs in case I can not purchase immortality
Don't it always seem to go * That you don't know what you've got * Till it's gone

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by VictoriaF » Mon Jan 11, 2016 10:40 am

A couple of similar threads have been locked by the Moderators. However, I have some burning personally-relevant questions. When I win my $1.3 billion, it will be too late asking how to deal with it. Thus I must prepare ahead of time:

- How to protect my physical safety from kidnappers?
- Where to look for reliable legal and financial teams?
- Are there public sources recommending the course of action for the winners to prepare before they reveal their identity?

Victoria
Last edited by VictoriaF on Mon Jan 11, 2016 10:41 am, edited 1 time in total.
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Epsilon Delta
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Epsilon Delta » Mon Jan 11, 2016 10:41 am

David Jay wrote:1. Take the Lump Sum, perhaps 600(?) million
2. Put 540 million in a donor-advised charitable trust
3. Keep 60 mil - 33 mil after taxes.
4. I can get by with a 2% SWR. :happy
This won't work. Charitable deductions are limited to 50% of AGI, so you'd end up owing over $100million with only $60million cash in hand.

That's why step you need:
0. Get professional help.

Personally I'd give the annuity serious consideration, particularly if I've already demonstrated financial irresponsibility by buying a ticket. But I'd need to get professional advice first to know if the payments were airtight or if I could do better by taking cash and doing it myself. The second step would be to squirrel a few million away in different bolt holes so as to have a backup if I really messed up.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by VictoriaF » Mon Jan 11, 2016 10:43 am

Epsilon Delta wrote:The second step would be to squirrel a few million away in different bolt holes so as to have a backup if I really messed up.
Does Bitcoin qualify as a bolt hole?

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by bradshaw1965 » Mon Jan 11, 2016 10:44 am

TIPS, and then figure out the best way to give it away.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by cfs » Mon Jan 11, 2016 10:49 am

The Village of the Locked

When I become the First Boglehead Lotto Billionaire I will NOT invest a penny in the Wall Street Casino.

This conversation will be sent to "The Village of the Locked" in three . . . two . . . one
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by mxs » Mon Jan 11, 2016 10:54 am

sawhorse wrote:I'd take the lump sum (I don't want to be in a situation, faced by some who chose annual payments, of the state not paying them due to budget problems).
I thought the annuity was with a private company and therefore no different than buying a large annuity yourself. Your risk should be with the annuity contract company, not the state.

I'd take 4% or so and put it in CD's for short term (1-5 year) spending and with the remainder put it in the 60/40 or 50/50 stock/bond ratio. As the CD's get spent replace them with the stock/bond sales at LTCG. Do that for a few years then decide to make any big moves. I like the idea of giving a lot of it away, but I also like the idea of having a lot of money to give family members and descendants when I pass.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Miakis » Mon Jan 11, 2016 11:05 am

We'd do a lot of what others have listed. We'd also give some sizable gifts to a few select friends to help them retire early.

Additionally - I would invest a big chunk in land. Land isn't my ideal investment currently, but with a few hundred million to kick around... It has the combined advantages of not kicking off annual taxable income, and being held for environmental preservation. It would be an important segment of my diversification.

As for the rest - We have no children and our wills leaves everything to charity. While we'd try to give a lot to charity while we lived, I would expect a big leftover portion. With that kind of cash, we'd really need to set up a charitable foundation to leave it to - because many of the charities that we favor could have trouble managing a massive bequest upon our deaths.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by VictoriaF » Mon Jan 11, 2016 11:09 am

When I win Powerball, I will start a "Three-Comma" thread.

Victoria
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by miles monroe » Mon Jan 11, 2016 11:16 am

700 hundred million birds in the hand is worth more than 1.3 billion birds in the bush.

no way would i accept the annutity. i don't trust the payee over 30 years.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Mingus » Mon Jan 11, 2016 11:17 am

I'd buy my neighborhood. Then bring over an army of skilled Italian masons and plasterers, and restore everything to brand new. And sell everything for a loss once complete.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by JupiterJones » Mon Jan 11, 2016 11:19 am

Tulip bulbs
Stay on target...

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Maynard F. Speer » Mon Jan 11, 2016 11:22 am

Take 5% out to put in a short-term portfolio - short-term bonds, money market

Then the other 95%:
25% Private Equity
25% Equities
25% Hedge Funds
25% Real Assets
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Scandium » Mon Jan 11, 2016 11:24 am

Mingus wrote:I'd buy my neighborhood. Then bring over an army of skilled Italian masons and plasterers, and restore everything to brand new. And sell everything for a loss once complete.
[OT comment removed by admin LadyGeek]

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by TareNeko » Mon Jan 11, 2016 11:40 am

BlackStrat wrote:I'd also spend most of it on booze and wimmenz.

...the rest I'd probably just waste.
So the first part is not a waste? :)

10YearPlan
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by 10YearPlan » Mon Jan 11, 2016 11:43 am

Honestly, it's too much money for me to even fathom really.
That said, half would be invested conservatively...like 50/50
I'd blow several million on luxuries (I'd start with a villa somewhere like St. John or maybe Italy...heck why not both?)
I'd "take care" of my family of course
And there would still be plenty of money to give back
I would also get started in Angel investing

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Qtman » Mon Jan 11, 2016 11:45 am

I would invest it in people, scholarships etc. As my late father-in-law, a mathematical genius ( may he rest in peace), used to say. People are the best investment you can make, help them develop and get an education. :idea:
Last edited by Qtman on Mon Jan 11, 2016 12:06 pm, edited 1 time in total.
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by HenryPorter » Mon Jan 11, 2016 11:51 am

Donate enough of it to favorite charities that the tax write off would effectively negate uncle sam getting any of it in taxes.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by randomguy » Mon Jan 11, 2016 11:51 am

sawhorse wrote:It's the ongoing kidnapping and ransom concerns that she can't manage.
Has there ever been a single case of kidnapping of a lottery winner in the US? There have been sibling murders, fraud, and so on but I am unaware of any kidnapping cases. People want your money, not you. Seriously there are tons of really rich people in the US. The number of kidnappings approaches 0.

That much money is life changing. You might not like the changes (i.e. having to move, way friends and family react, ....).

As far as investing,

300 million small cap value
100 million emerging market
100 million international small
100 million split 50/50 between US/international treasuries

and I will be too busy having fun to manage it any more than that. And I am more than willing to live on a mere 1 million or so after tax. I don't like shopping enough to spend much more than that.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by VictoriaF » Mon Jan 11, 2016 11:54 am

randomguy wrote:
sawhorse wrote:It's the ongoing kidnapping and ransom concerns that she can't manage.
Has there ever been a single case of kidnapping of a lottery winner in the US?
Even if there have been no kidnapping cases yet, the likelihood is high. It's easier than to rob a bank.

Victoria
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Will do good » Mon Jan 11, 2016 12:00 pm

HoosierJim wrote:If I won, I would immediately create the following new Boglehead threads....


- WON over A BILLION, DO I HAVE ENOUGH TO RETIRE?

- WON over A BILLION, PLEASE HELP ME DECIDE WHEN TO TAKE SOCIAL SECURITY?

- WON over A BILLION, 3 FUNDS OR TARGET PORTFOLIO?

- WON over A BILLION, HELP ME LOWER MY TAXES?

- WON over A BILLION, I AM A DOCTOR AND NEED SPECIAL HELP?

- WON over A BILLION, TILT OR NO TILT?

- WON over A BILLION, IS 2% SWR SAFE?

- WON over A BILLION - WWTD - WHAT WOULD TAYLOR DO?
This makes my day.

No, 2% SWR is not safe enough go lower.

Riverstwo
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Riverstwo » Mon Jan 11, 2016 12:11 pm

I live in Maryland and can remain anonymous! Few states can say that.

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Gort
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by Gort » Mon Jan 11, 2016 12:15 pm

I'd rather win $1 million and live in anonymity rather than $1.3 billion and have my entire life turned upside down :).

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by HenryPorter » Mon Jan 11, 2016 12:18 pm

Riverstwo wrote:I live in Maryland and can remain anonymous! Few states can say that.
So, is it good advice, if you won the major bucks lottery, to pull up stakes and move to MD and claim your ticket there before the deadline for claiming it? Or do you have to be an established resident with the whole deal of job, drivers license, etc. already established for a while? Mind you, this would be if you've won a big, big prize where chances were good that every friend and foe from your past and present would come out of the woodwork to ask for money or maybe even serve you with a lawsuit to extort money from you.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by mxs » Mon Jan 11, 2016 12:20 pm

HenryPorter wrote:
Riverstwo wrote:I live in Maryland and can remain anonymous! Few states can say that.
So, is it good advice, if you won the major bucks lottery, to pull up stakes and move to MD and claim your ticket there before the deadline for claiming it? Or do you have to be an established resident with the whole deal of job, drivers license, etc. already established for a while? Mind you, this would be if you've won a big, big prize where chances were good that every friend and foe from your past and present would come out of the woodwork to ask for money or maybe even serve you with a lawsuit to extort money from you.
I believe you have to claim the prize in the state in which the ticket was sold.

jaqueisse
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by jaqueisse » Mon Jan 11, 2016 12:24 pm

Did the French sell that seven hundred million dollar warship yet? Why not take the lump sum buy one of those? Use it as a nice houseboat.
Last edited by jaqueisse on Mon Jan 11, 2016 12:27 pm, edited 1 time in total.

HenryPorter
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Re: $1.3 Billion Jackpot - How would you invest it?

Post by HenryPorter » Mon Jan 11, 2016 12:25 pm

mxs wrote:
HenryPorter wrote:
Riverstwo wrote:I live in Maryland and can remain anonymous! Few states can say that.
So, is it good advice, if you won the major bucks lottery, to pull up stakes and move to MD and claim your ticket there before the deadline for claiming it? Or do you have to be an established resident with the whole deal of job, drivers license, etc. already established for a while? Mind you, this would be if you've won a big, big prize where chances were good that every friend and foe from your past and present would come out of the woodwork to ask for money or maybe even serve you with a lawsuit to extort money from you.
I believe you have to claim the prize in the state in which the ticket was sold.
I'm out, then. :D

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by arsenalfan » Mon Jan 11, 2016 12:30 pm

Blue Horseshoe Loves Anacott Steel.
If I lose it all, there's always money in the Banana Stand.

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by grog » Mon Jan 11, 2016 12:37 pm

If you take the lump sum, is there any way around paying the full 39.6% federal + state tax?

I would try to get some good legal and tax advice and would invest conservatively. TIPS maybe? I would focus mostly on figuring out what charitable causes to support. That is an absurd amount of money, especially considering most billionaires have a lot of their money tied up in their businesses (at least that's my impression).

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Re: $1.3 Billion Jackpot - How would you invest it?

Post by traveler90 » Mon Jan 11, 2016 12:37 pm

I'm guessing around $500 million after taxes. I guess I would get slightly more living in a state with no income tax?

$50 million - Cash in various vehicles
$75 million - Various bond funds
$350 million - Stocks (Total Stock Market, Total Intl Stock, and some individual stocks)
$20 million - to family
$5 million - buy a house, new car, etc.

I don't know anything about Trusts and what not, so I would obviously hire some professionals to help me deal with all of this.

I would just live on the cash for a long time, and maybe replenish back up to $50 million once I get down to $10 or so. I think I wouldn't need to replenish cash for well over a decade. Over time I would probably buy up some properties in my favorite cities around the world.

Radjob4me
Posts: 232
Joined: Mon Oct 05, 2015 10:08 am

Re: $1.3 Billion Jackpot - How would you invest it?

Post by Radjob4me » Mon Jan 11, 2016 12:41 pm

In both states where I would buy tickets (I live near a state border) you can claim the prize in a legal trust - only the trust name and address - and the picture of the lawyer who claims it for you - become part of the public record. I am willing to bet most states allow this, even if they don;t allow being totally "anonymous", it is the next best thing. So if you are worried about security then see if your state allows it.

I'd take the annuity, BTW. At that level of money, I'd take the known increase in value of 4% over time as a guaranteed return over 30 years. Some math website did the calculations and to even out over time, spending some certain amount each year, (assuming the high tax bracket doesn't increase), you'd have to get a return of about 5% per year to ensure going from 600 million to 1.3 billion after taxes.

Of course, with the lump sum, you could do some amazing things right away... Hard to even fathom, and not sure what that would be beyond "taking care of family" - payoff mortgages (no gift tax there), pay for college, etc..

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