If you’ve just won the lottery, then let me be the first to say congratulations! Also, any chance I could borrow a few thousand bucks and repay you in a few decades? No? Well, it would’ve been crazy not to try, at least.
Suddenly coming into a large sum of money will significantly change your life in unimaginable ways. Money can give you the power to chase your dreams, the security to eliminate a large number of daily worries, and the freedom to spend your time the way that you want.
Why Store Your Lotto Winnings in a Bank?
The best option would be to store your money in a bank. But that might not be as simple as it sounds. We’re talking about a lot of money here, and the decision where you put it can make a more considerable difference than you might think.
Should I Take a Lump Sum Payment or Establish Annuities?
Before looking for a bank, you’ll need to decide how you want your winnings paid out. Most lotteries will give you the option to either accept the money as a single lump sum or have it paid out each month in annuities. You’ll need to seriously consider the pros and cons of each before you make a final decision:
The Pros of a Lump Sum Payment
- A lump will mean that you receive all of your money at once.
- You can make enormous purchases with annuities
- The tax rate you receive Is guaranteed and locked
A Lump Will Mean That You Receive All of Your Money at Once
You will have complete control over your winnings, and the matter will be settled as soon as you accept the (often comically oversized) check. No waiting. No surprises. Just a check with a number so enormous that you have to blink several times before you get to the end.
You Can Make Enormous Purchases With Annuities
You’ll be able to make enormous purchases that might not be possible for a while with annuities. You could instantly buy a mansion, pay off any debts, make a large investment, or go on a luxurious vacation. The cash is yours to do with as you please.
The Tax Rate You Receive Is Guaranteed and Locked
Tax rates are constantly being re-evaluated and adjusted, so it’s a strong possibility that you’ll eventually have to pay a higher percentage of taxes with annuity payments. A lump sum means a one-time payment to the IRS, and you’re done with them for good.
The Cons of a Lump Sum Payment
- You probably already know that money tends to “burn a hole in your pocket.”
- You can always bet there’s a ton of fine print anytime money is involved.
- Taking a lump sum payment officially settles your account
You Probably Already Know That Money Tends to “Burn a Hole in Your Pocket.”
The flames from a $100 bill might be hot, but it’ll be nowhere near the scorching inferno that comes with winning the lottery. You’re much more likely to squander your winnings when you accept all of it simultaneously.
You Can Always Bet There’s a Ton of Fine Print Anytime Money Is Involved
The lottery is no different and often includes wording that the advertised amount is based on annuity payments. That means you probably won’t receive as much money by taking your winnings in a lump sum.
Taking a Lump Sum Payment Officially Settles Your Account
It will be up to you to support yourself and stretch your winnings for as long as possible. Even the largest sum of money you’ve ever seen can run out fast if you aren’t careful.
The Pros of Annuity Payments
- Annuities last for about 30 years and are paid out monthly
- Lottery commissions prefer to pay out the winnings over time
- Having cash dropped in your lap is difficult to handle
Annuities Last for About 30 Years and Are Paid Out Monthly
Some pay out weekly throughout your life, but these are somewhat rare. In other words, taking the annuity payment is like having a job that requires absolutely no work and pays a monthly salary that’s more than what most people make in a year.
Lottery Commissions Prefer To Pay Out the Winnings Over Time
They will typically advertise the annuity payment as the jackpot prize. For example, if there is a $1.5 billion lottery, the lump sum payment would only be around $930 million. That’s before taxes took another chunk. Selecting the annuity payment opinion would get you the entire $1.5 billion paid out over the next 30 years.
Having Cash Dropped in Your Lap Is Difficult To Handle
That’s what happens when you take a lump sum. Taking the annuity will help you space out the money and give you time to plan and effectively manage your new fortune strategically.
The Cons of Annuity Payments
- Each payment is only a small percentage of your winnings
- Each annuity payment is taxed based on the current year’s rates
- Anything can happen during the 30 years that most annuities payout
Each payment is only a small percentage of your winnings
That might not be much of a problem, depending on how much money you’ve won. But it’s worth calculating when you’re making your decision because it could be a while before you can avoid a new home, make a big-time investment, or pay off debts.
Each annuity payment is taxed based on the current year’s rates
Politicians are always trying to find the right balance between high enough taxes to cover the budget and low enough taxes to stay elected. If the rates increase, you’ll be at their mercy and could wind up paying more in taxes.
Anything can happen during the 30 years that most annuities payout
If you were to pass away, the money would still go to your estate. However, it would be a real shame to miss out on enjoying all of your earnings.
Which U.S. Banks Can Handle My Lottery Winnings?
- Private Bank
- Citigold Private Client
- Union Bank Private
- Chase Private Client
- HSBC Premier
- Union Bank of Switzerland
The decision between lump sum or annuity payments is difficult, but eventually, you’ll select the one that’s best for you. The next decision that you’ll need to make is what to do with all of your money.
Your first instinct is probably to deposit your money into your current bank account. After all, you probably have a good relationship with your bank, which beats opening another account elsewhere. But before you make your local teller feel like she’s on Punk’D, you might want to consider using a private bank instead.
Private banks are a combination of banking, investments, and other financial services specifically geared for individuals with a high net worth. Normal banks are ill-equipped to handle the complexities of millionaires managing their extremely diverse portfolios.
Private banks often hire the best lawyers, financial planners, accountants, and tax consultants to tend to their client's financial needs.
Here is a list of the best private banks that could easily handle your lottery winnings:
Private Bank
Bank of America has a relatively large division reserved for ultra-wealthy clients, simply known as Private Bank. You’ll need at least $3 million in liquid assets to qualify for membership.
Citigold Private Client
The private division of Citibank is known as the Citigold Private Client and requires an initial deposit of at least $1 million. One of the best incentives for this bank is that all private clients have their bank fees waived.
Union Bank Private
The Union Bank Private Advantage Checking account doesn’t come with any monthly, overdraft, or ATM withdrawal fees. You’ll need to maintain a monthly minimum balance of at least $250,000 to continue service.
Chase Private Client
High net worth account holders at Chase aren’t required to pay standard banking fees and are given access to additional debit cards for family, caregivers, and others. There is no minimum qualification to be accepted, but you’ll need at least $150,000 to waive the $35 monthly service fee.
HSBC Premier
The primary qualification for an HSBC Premier account is to maintain a minimum monthly balance of at least $100,000. The bank offers various financial services in return and even offers $2,000 a year for referring a new client to the bank.
Union Bank of Switzerland
UBS is one of the biggest and most powerful private banks in the world and offers incredible financial services and portfolio management from elite financial advisors free of charge. To qualify for a free account, you’ll need to maintain a minimum balance of at least $75,000.
What Are the Smartest Ways To Spend My Lottery Winnings?
To avoid financial ruin, you’ll need to be smart with your money and spend it wisely. Here are a few examples of the smartest ways to spend your lottery winnings:
- Open a Savings Account. Savings accounts will typically come with much higher interest rates than checking accounts. In some cases, they might come with rewards and benefits that greatly increase your money.
- Pay Off Debt. There is no reason for your debt to accrue any more interest. Pay off any student loans, credit cards, mortgages, car loans, or accounts that you still owe money on and close the book on them forever.
- Establish an Emergency Fund. The skies might look blue and clear right now, but there is always a chance it’ll rain someday. It’s best to establish an emergency fund in case anything ever goes wrong.
- Create an Investment Strategy. You need to figure out ways to make your money work for you. Buying expensive jewelry and going on exotic vacations is fun, but it’s how you wind up broke. Buying businesses and real estate are how you stay rich and make even more money.
- Plan Your Estate. The best-case scenario is that you live off your fortune and enjoy the remaining time on this planet. Eventually, there will come a time when it’s time to move on and leave your children and relatives everything that you’ve accrued. The best time to start planning for this inevitability is now.
The odds of winning the Mega Millions jackpot are a little lower than 1 in 300 million, so there aren't many people that can guide you through the experience. However, there are probably more than 300 million “financial advisors” that would gladly guide you through spending your large sums of money.
Winning the lottery might feel like you’ll never be broke again, but that’s absolutely not the case. In fact, lottery winners are likelier to declare bankruptcy within three to five years than the average American. You could wind up in a much worse financial situation after winning the lottery than you ever were before you picked the winning numbers.
See if Lightning Can Strike Twice With Yotta
Tons of doors will open up to you as a lottery winner. Private banks that would have never reviewed your application will now be begging for your membership. You’ll have a few options, and each comes with its benefits and qualifications. Ultimately, there is no wrong choice when you’ve enough money to be invited to those banks.
While you can use these banks as your primary financial intuition, spreading the money around might be a good idea. You can open up several emergency funds and savings accounts to ensure you're taken care of for life. By opening up an account with Yotta, you could strike gold twice.
The way Yotta works is fairly simple. You accumulate tickets based on the amount of money in your account and spending habits. Each ticket has a total of six numbers. Depending on how many numbers on your tickets match, you could win the $1 million jackpot. A $1 million prize could brighten up even the darkest skies of a rainy day.
Visit Yotta today to find out more and open up your account. You might have won the lottery once, so why not see if your luck can hold on one more time? It won’t cost anything, and you’ll finally be able to know if lightning can strike twice.
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