A lottery winner has a lot of financial decisions to make. They must decide whether to take a lump sum or annual payments, invest the money and plan for how the prize will be distributed. They must also consider their tax liability.
They must protect their privacy and avoid being contacted by media or long-lost friends who may see the jackpot as an opportunity to score a quick buck. They should hire a lawyer, a financial advisor and an accountant who will coach them through the process.
Besides protecting their privacy, lottery winners should take care of their health and well-being. They should eat right, exercise, talk to close family and friends and seek professional counseling if handling their new wealth is causing them too much stress.
In the case of large winnings, experts recommend taking a lump sum because it gives you more control over your money. Then, you can invest it in high-return assets or use it to buy a business.
The lump sum, or annuity, can also keep you from losing your money if you make poor investment choices. The payouts don’t start until the eighth or ninth year after you win, and that allows you to reset your spending habits and gain more experience managing a large amount of cash.
A responsible lottery winner will dump any of the cash they’re not using into some safe investments such as real estate, stocks, index funds or mutual funds. This way, they’ll preserve and even grow their wealth.