It’s the conversation happening in homes and offices around Australia – if you won Thursday’s $200 million Powerball, how would you spend the money?
We put that question to the experts, who say there’s one thing to absolutely avoid – telling all your friends and family.
The $200 million will be drawn on Thursday.
It might seem cruel or immoral to keep your new-found wealth a secret, but spilling the beans before you’ve decided on how best to spend your millions could land you in a world of pain.
The Thursday Powerball jackpot is the biggest prize in Australian lottery history. No ticket holder held all seven winning numbers plus the Powerball needed to take home the $150 million last week.
Financial planner Brenton Tong of Financial Spectrum has experience of advising lottery winners. His first piece of advice is to stick most of it in a term deposit, meaning you can’t touch it for 12 months.
“Often my advice is park it – pay off the mortgage and don’t tell anyone,” he said.
Tong said keeping a year’s “salary” to enjoy, but putting most away to gather interest, will give you time to put together both a financial plan and a strategy on how to manage family and friends.
That could include keeping the win completely to yourself and only telling your few most trusted loved ones. Tong said he has even been tasked with coming up with cover stories for clients in the past to explain their new fortune without revealing their huge win.
Brenton Tong says term deposits are the best way to maximise winnings.
“If you win and then tomorrow say you won the lottery, everyone will know that you won the $200 million, but by the time you tell people (when the term deposit expires) there’s been hundreds of lotteries in 12 months,” he said.
“If people think you’ve won $5 million they’ll have a certain expectation. If they think it’s the $200 million, that’s a different set of expectations.”
Winning the lottery can change lives for the better, but it has also torn families apart.
According to The Washington Post, a Pennsylvania man who won $16.2 million in 1988 found himself in $1 million debt within 12 months and was sued by his former girlfriend and landlady for a third of his winnings. His brother allegedly hired a hitman in hopes that he would inherit the windfall.
A Queensland father is estranged from his family after a dispute over $300,000 gifted to his daughter after a lotto win. The man tried to take back the cash after a disagreement, leading the family to take the dispute through the courts.
Tong recommends if you do win the lottery, have a good think about who you trust and who to ask for advice.
“It’s not all doom and gloom. Winning the lottery is amazing, but you don’t want to end up lonely. If someone thinks that you’re not playing fair and not sharing your winnings, that’s going to alter your relationship,” he said.
Often the first response to “what would you do with the money?” is “buy a house, a car, go on holiday and quit my job”. James Wrigley of First Financial said his biggest tip was to try and keep the initial purchases to a minimum.
“The biggest mistake is spending the money on things; trips, cars, jewellery, burning through it and having nothing left,” he said.
“Once you’ve spent the money it’s gone. The better approach is to spend some on a house, a car, and a nice holiday but with the bulk of the money invest and instead of spending the $200 million, spend the income that your investments make every year.
“That way your money can last your lifetime and your children’s lifetime.”
Wrigley also recommends putting together a team of experts, including financial planners and lawyers, with a range of expertise to call on.
Half of all adult Australians are expected to enter the draw, with the peak of interest last week seeing 7445 tickets bought in a single minute.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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