If you win a lottery jackpot, the first thing you have to do is decide how to spend it. Most winners choose to take a lump sum payment and invest the money. But that option isn’t without its downsides, a financial planner says. For example, the New York Lottery has to buy special U.S. Treasury bonds to pay out the annual payments, which can cost up to a fifth of the jackpot amount. The bonds also earn an estimated 5-percent interest. But investors can often do better than that.
Lottery players contribute billions in tax revenue—money that could have gone toward retirement savings or college tuition. They also forgo investing in other assets, which could make them richer over time. That doesn’t mean you should avoid playing, but consider the odds of winning.
The odds of hitting a lottery jackpot are very low, but winning isn’t impossible. Richard Lustig, an expert in maximizing lottery winnings, has helped people turn a small investment into life-changing wealth. He doesn’t promise magical spells or enchanted amulets, but says a careful blend of strategy and a bit of luck can help you beat the odds.
Super-sized jackpots drive lottery sales, and they also draw media attention. To keep those jackpots growing to newsworthy amounts, lottery organizers have made the games harder to win. Today, Powerball and Mega Millions have odds of about one in 292 million—roughly the combined population served by the states that sell tickets to those two lotteries. Those odds haven’t stopped lottery players, though.