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Originally posted by morphius
A young lady, i heard, recently won the lottery and she choose to talk only half of it in a lump some, all at once, she should have put it in the bank, this was foolish. I think she took that half which was around 58 million dollars, instead of twice this amount.
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If you don't take it in a lump sum the lottery pays it out over time, 20, sometimes 40 years. The lottery depends on the time-value of money to come up with the whole amount won. If you take the lower, lump sum payment,
you get to decide how it gets invested and what you'll have at the end of that 20 or 40 years.
Anyone who takes the money over time instead of a lower lump sum amount is trusting that the growth value the lottery is counting on is more than what you could do with some half decent financial advice.
So, she wasn't foolish at all.