Here's Mark Cuban's advice for whoever wins the $508 million lottery jackpot

[big dog cowboy]

Here's Mark Cuban's advice for whoever wins the $508 million lottery jackpot
Libby Kane
7-7-16


Mark and Tiffany Cuban. Pool / Pool / Getty Images


The Mega Millions lottery has reached an estimated $540 million.

On Friday, someone could win that money and become rich in a matter of moments.

What then?

When the Mega Millions lottery reached a record high of $1.6 billion in January, Business Insider reached out to billionaire Mark Cuban to get his best advice for the winner. (Ultimately, it ended up being winners, thanks to three winning tickets.)

While there's a sizable gap between $540 million and $1.6 billion, the concept is the same: getting rich overnight.

In January, Cuban shared the advice he gave his local paper, The Dallas Morning News, which is just as applicable to Friday's winner:

• [The first thing you should do is] hire a tax attorney.

• Don't take the lump sum. You don't want to blow it all in one spot.

• If you weren't happy yesterday, you won't be happy tomorrow. It's money. It's not happiness.

• If you were happy yesterday, you are going to be a lot happier tomorrow. It's money. Life gets easier when you don't have to worry about the bills.

• Tell all your friends and relatives no. They will ask. Tell them no. If you are close to them, you already know who needs help and what they need. Feel free to help SOME, but talk to your accountant before you do anything and remember this, no one needs $1 million for anything. No one needs $100,000 for anything. Anyone who asks is not your friend.

• You don't become a smart investor when you win the lottery. Don't make investments. You can put it in the bank and live comfortably. Forever. You will sleep a lot better knowing you won't lose money.

He also shared one last bonus tip with Business Insider: "Be nice. No one likes a mean billionaire. "

http://www.businessinsider.com/mark-cuban-advice-lottery-winners-2016-7

 

[Tabascocat]

I did not see where he said to buy a multi-million dollar yacht!!!!

 

[CyberB0b]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

 

[Idgit]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

Today's dollars spend a lot faster than tomorrow's dollars, too. If you have restraint, lump sum it is. He's probably figuring most people don't have restraint. Not sure he isn't right.

But other than that one that perked up my ears, too, it's pretty good advice overall. The same sort of thing the NFL ought to be telling its players.

 

[Tabascocat]

Today's dollars spend a lot faster than tomorrow's dollars, too. If you have restraint, lump sum it is. He's probably figuring most people don't have restraint. Not sure he isn't right.

But other than that one that perked up my ears, too, it's pretty good advice overall. The same sort of thing the NFL ought to be telling its players.

Yup, most people will blow it fast(after taxes and friends/family's hands in their pockets). A prime example is me buying a huge yacht!

 

[AzorAhai]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

That argument is completey ridiculous from the get go. Lump sum is half minus another ~40% for taxes. Or around 162 million. Or 324 million after taxes for an annuity. Unless age is a factor, there's no argument that can justify saying 162 million today is more valuable than 324 over 20 years even with the value of a dollar going down.

 

[DFWJC]

I'd take the lum sum.
After tax lump sum payout of 540 mil is 232.2 million.

also...
With our national debt blowing away anything in world history and a dwindling number of people to pay for it, the taxes will be going up until someone taking payouts 15 years from now will get next to none of it. Some would love a 90% tax on anything over a couple of million.

Anyway, in the end it's just preference.
I'm sure any of us would take either one.

 

[iceberg]

Today's dollars spend a lot faster than tomorrow's dollars, too. If you have restraint, lump sum it is. He's probably figuring most people don't have restraint. Not sure he isn't right.

But other than that one that perked up my ears, too, it's pretty good advice overall. The same sort of thing the NFL ought to be telling its players.

depends on how many years i think i may have left to go.

i could see taking the lump sum and then intentionally going to visit a lawyer and broker to put it in a managed fund *i* can ultimately control but have people help me "keep it real".

but - for fun - if you won $500mil after taxes (if we're having fun get the taxes out of the way!) - what would you do?

1) quit my job of course. not cause i hate it but because i can afford to do my own thing. i actually like my job.
2) determine where i want to live - and then buy a house away from the city but have it close by. maybe stay in dallas, go to austin, or orlando where i have family. not a huge mansion - just a nice country home with a barn for some cars i'd like to get and play with.
3) pay off my car. it's a new 300S and i like it. no need to go buy something else but no need to have that debt either.
4) work on my radio station and writing career i've always wanted to.
5) travel and see my family a lot more than i do now.

i could likely do all this for under 1/2 a mil (a house outside any of these ares with 10-20 acres and the buildings i want would eat up a lot of that) and then live off interest and a smart safe investment plan.

what would YOU do with $500mil?

oddly enough i can do 4 and 5 now so on it.

 

[paladin]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

For people with financial knowledge/savvy, you are correct.
Cuban is talking to people who play the lottery.
Those are two different sets of people.

 

[iceberg]

For people with financial knowledge/savvy, you are correct.
Cuban is talking to people who play the lottery.
Those are two different sets of people.

i've known people who won the lottery and got a few milllion. they were back to broke a few years later.

it's one of the reasons i think that even if you took all the wealth of the world and divided it evenly among everyone, it will revert back to what we have. some people know how to plan and prepare, others simply do not.

 

[Yakuza Rich]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

Unless things have changed, you take the lump sum because if you die...your payments would stop so your family or whomever is in your will, would not get another dime. That's the vast majority take the lump sum instead of the payouts. I know that there are some lottos, like the 'win $1K a week for the rest of your life' does pay out even if a person passes away. I think it pays for at least 20 years though.

He also forgot to mention that you are either going to have to incorporate yourself or put the money into a trust. That way if somebody sues you, your lotto money is protected. Although I would imagine a tax attorney would tell you that.






YR

 

[Yakuza Rich]

i've known people who won the lottery and got a few milllion. they were back to broke a few years later.

it's one of the reasons i think that even if you took all the wealth of the world and divided it evenly among everyone, it will revert back to what we have. some people know how to plan and prepare, others simply do not.

Growing up, my friends that lived down the street...their uncle won the first every NY State lotto. The payout wasn't outrageous like you see these days...even if adjusted for inflation. He went broke shortly after. Helps when you total 3 new sports cars in the first month.

I had another friend that won $800k in the lotto, but he was smart enough to put it aside and save it for his childrens' college education.

I tend to believe that going bankrupt with that much money is still very hard to do. A few years ago, a friend of mine inherited over $1 million from his grandfather after he passed away. He went broke in 3 years. However, he never invested 1 penny of it and did nothing but spend as much of it as he could. He was living in a $10k a month apartment, made a short film, gave numerous trips to Vegas for him and other friends where he paid for everything. It was kind of like watching a real live Brewster's Millions..it just took a lot to throw away that money. And that was 'only' $1 million. I tend to think he would have wasted $10 million if he had inherited that, but maybe he would have finally had the sense to invest a million or so.

Usually, when they show people that blow their millions won in the lottery, they are usually drug addicts going into winning the lottery and there's no surer way to blow money than on drugs.






YR

 

[CyberB0b]

That argument is completey ridiculous from the get go. Lump sum is half minus another ~40% for taxes. Or around 162 million. Or 324 million after taxes for an annuity. Unless age is a factor, there's no argument that can justify saying 162 million today is more valuable than 324 over 20 years even with the value of a dollar going down.

Your 324 annuity number doesn't calculate the annual tax. .

 

[rynochop]

I'm not sure why you'd need tax attorneys and accountants if your just putting it in the bank per his suggestion.

I'd just put most of it in municipal bonds. You could live pretty high on the hog on interest.

 

[CyberB0b]

I'm not sure why you'd need tax attorneys and accountants if your just putting it in the bank per his suggestion.

I'd just put most of it in municipal bonds. You could live pretty high on the hog on interest.

You'd need to spread it out or pay insurance on the money. There's also a chance you will face multiple lawsuits once people smell money.

 

[AzorAhai]

Your 324 annuity number doesn't calculate the annual tax. .

You are going to pay taxes on the annuities every time you receive one. The annuities are based on 540, so yes you should get somewhere around 324 million. Or 20 payments of around 17 million after paying taxes on it. They can't charge you twice for it. Either way you slice it, you are paying 40% in taxes total on what you receive. 40% of the cash sum or 40% of the total winnings in annuities.

 

[panchucko]

He's flat wrong about the lump sum. Today's dollars are worth a lot more than tomorrow's.

I probably wouldn't live long enough to collect for 29 years that would put me at 84 years old, so lump sum it would be for me.

 

[DFWJC]

That argument is completey ridiculous from the get go. Lump sum is half minus another ~40% for taxes. Or around 162 million. Or 324 million after taxes for an annuity. Unless age is a factor, there's no argument that can justify saying 162 million today is more valuable than 324 over 20 years even with the value of a dollar going down.

232 million is the after tax payout

no need to be rude

Your 324 annuity number doesn't calculate the annual tax. .

He missed a few things

 

[AzorAhai]

232 million is the after tax payout

no need to be rude


He missed a few things

No its not. The cash value is always around half of the jackpot and you can take another 40% off for taxes. And no I didn't forget anything. You pay taxes on the annuities you receive annually which in the end is still going to be around 40% on this large of a jackpot. There is no penalty for taking the annuities so all you are going to pay is the 40% taxes on your installments.

 

[DFWJC]

No its not. The cash value is always around half of the jackpot and you can take another 40% off for taxes. And no I didn't forget anything. You pay taxes on the annuities you receive annually which in the end is still going to be around 40% on this large of a jackpot. There is no penalty for taking the annuities so all you are going to pay is the 40% taxes on your installments.

Lump sum for 540 mil is 380 mil before tax.
It's discounted by 30% not 50%

so fater tax, 228 today vs 324 spread out over 30 years.

But yeah, you're right about the annuity being the full amount before tax,
A matter of preference I suppose.