If I Win the Lottery Where do I Put the Money?
So you’ve gone and won the big jackpot. Let’s say, for argument’s sake, that it’s the American Powerball and you’ve now got a huge sum of money to spend or invest.
(Note: By the way, this information applies equally to people who have inherited or earned vast sums of money by more “normal” routes.)
What Banks Do Lottery Winners Use?
With several million that needs a home, you’re not going to be able to walk into your local branch and pop it in your savings account. The good news is that, should you win the lottery, you’ll have some people there to advise you. The UK National Lottery for example have a dedicated advsior, Andy Carter, who fields questions from lottery winners as a job.
According to Carter: “For wins of more than £500,000 we recommend that winners choose a private bank – all high street banks have private arms that deal with high net worth individuals, and some banks even have a small team of people that just deal with lottery winners! We have contacts with all the major banks and arrange for someone to attend the validation meeting to set up a special account.”
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We’ve seen banks like Coutts mentioned as a potential go-to for big winners, since they count the Queen among their clients. But there have been reports in the press of winners being dissatisfied with the bank’s service. One couple asked for compensation after the bank’s handling of their money left them with only £10,000 a year to live on.
The good news about lottery wins in the UK is that the lump sum is not subject to tax, only the interest accrued on that money. And did you know the money is sent to you via bank transfer as soon as the lottery provider confirms your win – those giant novelty cheques are all for show!
What Do Lottery Winners Invest In?
I suppose the bigger questions is what don’t they invest in! Lottery winners have channelled their fortunes into some truly bizzare things over the years, including weather stations and an acre on the moon.
But we assume you want to know what winners should invest in…well, there are several options. (Disclaimer: Always consult a financial advisor about investments) .
- Property: Among the most stable of long-term investments, property might not accrue value as quickly as other options but it’s unlikely to lose you money.
- CNBC reported that millionaires, particularly in America, love financial stocks at the moment and are reducing their exposure to the technology sector.
- Lottery winners can afford to be boring with their investment and invest in short-term corporate bonds or emerging market stocks. There has also been increased interest in renewables in recent years.
- It’s also worth taking time to consider where you live as a millionaire: if you’re living in the UK, the money you earn on your investments is likely to be eaten away by income tax, capital gains tax and inheritance tax. Countries that are more favourable to millionaires include Dubai, Switzerland, and Monaco.
Most lottery winners choose to stay anonymous so it’s hard to find out what exactly they do with their money. The ones who get their faces plastered over the front of tabloid newspapers often reveal just what they spend their money on!