How Should You Invest?

If you took my advice and hired a fee-only adviser, then the question of how should you invest is something they should help you with. However, because I know a lot about this subject, I’ll give you my thoughts and you can double-check my advice with what they tell you. If we’re both saying the same thing, then you can have confidence that you’re on the right path.

Everyone is going to have different goals when they win the lottery. Winners are in different life stages, as well as different geographic locations, therefore the advise is not always the same. Where you put the money should be custom tailored to your goals and objectives.

The main options you have is something like this:

1. Put it all in the bank. This is probably a bad option for those living in the western world in this present age. In the past, you could get 3-5% interest from your bank by parking your money there. In today’s low or negative interest rate environment, you’ll get practically nothing or even get charged interest if you live in Europe. A bank is a safe place to put the money temporarily, or a portion of it (say up to a year or two of living expenses), but putting it all there is not advisable.
2. Give it all to an insurance company and get a return on the money while you are living as well as a death benefit for your heirs. This is life insurance called whole life. Typically this is not your best option if you are young, as the insurance companies and insurance salesmen take out a big chunk of high fees for products like this. In the previous post I recommended staying away from advisers who charge high fees. However, if you are getting along in years, this might be a very good option because of an income tax loophole. Some whole life insurance pays out an annual dividend that is tax free. That’s great. However, all life insurance pays out the death benefit tax free. That means when you die that your heirs can get the money without paying any income taxes. This is a big deal if you are worth millions upon millions and your kids are going to owe up to 40% in federal income tax (and possibly more with state income tax)! Even though the fees are high in an insurance product like this, the tax savings may more than overcome them. There is some risk with insurance companies these days and without getting too complex here, low interest rates are bad for insurance companies. Some could go bankrupt if interest rates stay low for a long time. If you were serious about this, at least spread the policy over several companies in case one goes under. Or, don’t put all your money in life insurance.
3. Bonds. For a long time (say from the 1700s to the mid 1900s) the saying went “gentlemen prefer bonds.” Stocks were considered too risky and more like gambling, therefore if you wanted to invest your money you bought bonds. There are various flavors like corporate bonds (say from Coca-Cola or Apple or some other company), municipal bonds (say from your city, school district, or state – generally tax free if you buy some from the same state you live in), treasury bonds (from the U.S. Government, other countries have different names for them), mortgage-backed bonds (these are full of mortgages from people’s houses or office buildings), high-yield bonds (these are like corporate bonds but are from very low quality companies that may not be able to pay you back). In today’s low interest rate environment, generally this is not a great time to be buying a lot of bonds. If you are OK living with 1-3% interest (and paying lots of taxes on that interest unless it’s a municipal bond) then maybe it’s OK. However, if you are young I think you should only put a portion in bonds, if any at all.
4. Stocks. It is true that stocks were very risky for a long time. There was all sorts of fraud and manipulation out there in the 1800s and early 1900s. There were no mutual funds or index funds so buying lots of stocks for diversification was difficult and expensive. However, after lots of trial and error, we have a ‘relatively’ stable and functioning stock market in the present day. Because of regulation, we can generally trust what’s going on behind the scenes. There will always be bad people out there, but we’ve generally figured out how to keep those bad people from blowing the whole economy up. If you are young, buying stock index funds will most likely be the highest paying investment you have available to you. Over the long term of course. I’m talking like 20, 30, 50 years. I am 36 and if I won the lottery, almost all my money would be invested in stocks and stock index funds. If I had $10 million dollars after taxes, I could buy the S&P 500 index fund and get about 2% dividend yield today. That would give me $200,000 per year in dividends (taxes could be up to 15% on that $200k). Each year, unless there’s a complete market melt-down, those dividends increase. So my $200k annual income would increase over time. By the time I’m 75, I might be making $1 million per year in dividend income and that S&P 500 index fund might be worth $50 million. It’s hard to beat that kind of a deal. I’ll probably go into much more detail on this in a future post.
5. Real Estate. If you are the kind of person that is more comfortable with investing in real estate, then this is probably where most or all of your money will end up. Just don’t over-leverage yourself. If you are worth millions, there’s no sense in risking it all on a leveraged up real estate deal. You can pay cash for income properties or put down 50% and still live a comfortable lifestyle. If you live out in the country and grew up on a farm, you may want to take your winnings and buy a farm or ranch that makes money from what it produces. Once again, don’t over-leverage yourself here. Lifestock and commodity prices fluctuate all over the place. If you won the lottery you have no idea if prices are at a top or at a bottom. No sense taking your $10 million in winnings, buying a $100 million farm only to lose it all in a few years when prices crashed and you couldn’t make the payments on the note.
6. Private Businesses. There are those people out there who don’t have a clue about the stock market, bonds or real estate. But they run a successful business (or multiple businesses). If you are the kind of person who does this, and you win the lottery, probably the best place for your money is in what you already know. Go out and invest that money in your current business or buy another business you like. Run it well and reap the rewards. Just don’t go crazy and over-leverage yourself. I’ll be looking for your face on Forbes in the future.

What should you not invest in?

1. Gold, guns, panic shelters and other end of the world scenarios. If the end of the world is truly here, it won’t matter what you have. It’ll all be gone anyways along with everyone and everything else. If you’re going to do something like the Permanent Portfolio, then holding 25% of your money in gold is part of the plan. However, anything more than that is a waste. Gold doesn’t provide you any income, and where are you going to store $50 million in gold? If the semi-end-of-the-world scenario plays out, and you are the only guy within 200 miles that has land, food, guns and gold, how long do you think you can hold out before the masses overtake you? When 50,000 people hear that Joe Prudent has everything stashed away in his shelter, you won’t want to be anywhere near that shelter when they come knocking at the door.
2. Your family member’s business idea. Cousin Frank just knows he can become the next Bill Gates with his brilliant plan to sell insect protein to hipsters. All he needs is several million dollars to do it. This is a bad idea. I don’t care how close you are to the guy, and I don’t care if you owe him for saving your life when you were 5. Don’t invest money in business plans for family members unless you’ve done it before – a lot. Startup companies are extremely risky investments (even with PhD’s running them), you would need to invest in at least 30-50, and more like 100, for you to have a reasonable chance of doing well. That means if you had $10 million, you couldn’t invest more than $100k in any one business idea. Generally you should stay away from this unless you’ve done it before, and done it well. However, if you refuse my advise, at least keep it to a max 1% of your money for each business plan.
3. A complete stranger needing your money to develop a shopping mall in Florida. You shouldn’t invest in people you don’t know, you shouldn’t invest in things you don’t understand, so if both of these scenarios apply stay away! This is the quickest way lottery winners can blow away their savings.

Most likely, your financial adviser will have you investing in a diversified portfolio of stocks,  bonds, real estate and perhaps some to a life insurance policy. If you are adamant about investing in others’ ideas, I would advise capping those investments at 10% of your net worth. That means if you are worth $10 million, the most you would invest in others is $1 million. And like I said before, that $1 million should be spread across 30-50, if not 100 ideas.

A diversified portfolio should give you about 2-4% in annual income in today’s environment. If you are worth millions, that should be enough to live off of without ever having to sell portions off to fund your lifestyle.

What to Look For in a Financial Adviser

If you don’t know much about investing, and certainly if you’ve never invested money before, it would be a very, very good idea to get a financial adviser after winning the lottery. However, there’s a good chance that you don’t know how the industry works, and more importantly how you can find one that fits you.

Unfortunately a lot of the financial advice business out there is mostly a bunch of salespeople trying to sell you something. They aren’t looking out for your best interests, they are looking out for theirs. They get a kickback based on what they sell you, and it doesn’t really matter if you make any money or not. The typical financial adviser or broker takes large fees for selling you life insurance or a mutual fund. The insurance companies and mutual funds take out crazy amounts of fees from you and give a chunk of it to the salesperson who sold it. For instance, they can sell you a mutual fund that charges a 5% up front fee before investing a nickel of your money. If you won $10,000,000 dollars, that’s $500k you just gave the mutual fund/adviser. On top of that, the mutual fund will charge an additional 1-2% fees (of your investment) each year to manage the fund, and the financial adviser may also charge you a fee to ‘manage’ your account. Add up all the fees and in the end you aren’t left with much.

Salespeople posing as financial advisers may be fine for someone starting out with nothing, and the kickback is all the adviser may ever get for his/her service. However, for you, with a large lottery win, you can do better. You can find someone who is legally obligated to provide you with the best advice possible, and legally works for your interest instead of theirs. These are called ‘fee-only advisers,’ Registered Investment Advisers, Registered Investment Adviser Representatives, or Certified Financial Planner. You don’t want this person making a nickel of a kickback for any investment they put you in, unless they tell you up front and you are OK with it.

You want to pay this adviser a set fee for their services, maybe an hourly rate, a flat rate, or a percentage of the money they will be managing for you. You want to stay away from anyone making a commission based on what they do for you, as that would mean their interests aren’t aligned with yours. If they are charging by the hour, or a flat fee, or a percentage of your assets, then you can generally understand that they are unbiased and working for your best interest.

A good adviser can be worth their weight in gold. You shouldn’t be looking to them to make you rich. You are already rich (you just won the lottery), now you need someone who can help you intelligently invest that money so that you can live off of it the rest of your life and never run out. You should look to them not as a cash machine, but more like a personal trainer. Anyone can go out there and learn to exercise on their own…people hire personal trainers to help them get started, as well as to help motivate them to do the right things. If everyone was motivated to exercise we wouldn’t need personal trainers. However, because we know we’re lazy humans, we hire someone to help us do the things we want to do deep inside but lack the energy to do so.

You can really screw up managing your own money if you’ve never done it before. A good adviser will keep you from making big mistakes that can cost you a lot of money. After enough education, training and personal transformation, you should be able to manage your money on your own – if you want to.

How Lottery Winners Go Broke

A woman I used to work with is friends with a couple that won $18 million in the lottery. They were poor before hitting it big, and did not know how to handle it. They passed out money to friends and family, bought a ranch, trucks, other material possessions and blew the rest on drugs and alcohol. They lived wild for a few years and then, as my co-worker said, “she was back to hookin’ at the truck stop.”

This is unfortunately all too common.

If you’ve read my previous posts here and here, you would know that you’ll need to do more than just go by your initial gut instincts when receiving a large windfall of money. The speed at which money comes into your life is the speed at which it goes out of your life, unless you make the necessary changes in your way of thinking. If you don’t view $18 million dollars as $18 million dollars, but rather as $450k/yr (2.5% interest/dividends per year) before tax, then you’ll never run out of money.

Other ways in which you can blow all your money in a short amount of time are:

1. Not living by a budget, even if you are a millionaire.
2. Investing in things when you don’t have the expertise to do so. Examples of this are giving money to a financial adviser who steals it all, giving money to a friend/family member to invest and they run away with it, letting an accountant manage your finances and they steal it, or putting all your money into 1 company and it goes out of business.
3. Buying things for friends and family members. This is a never-ending pit which will eventually take all your money, no matter how much you started out with.
4. Addictions will be magnified if you have a lot of money. If you are addicted to drugs, alcohol, shopping, gambling or sex and are wealthy, you won’t be wealthy for long. This is why I recommend getting good counseling shortly after winning. Addictions will never be satisfied and are very expensive hobbies.

The best way to ensure your money outlasts your life is to understand what your annual income is, create a budget, and live by a budget. I will get into much more detail about incomes and budgets in future posts.

Spend Money On Relationships

A quick Google search on money and relationships gives you a bunch of articles talking about communication with your spouse about money or ‘should you spend money on your girlfriend.’ These are good things to know and discuss. But I’m going to take it one step further and give you a secret of mine that will give you much more satisfaction when you spend money. The secret is:

Spend money on relationships.

What do I mean by that? When you ask someone what they would do if they won the lottery, many of them start off talking about buying houses, cars, trucks, boats, planes, 70″ tv’s, etc. This will be exciting in the beginning, especially if there’s a lot of pent-up demand for spending in your life. The statistics show that lower-income people are more likely to play the lottery than higher-income people, so it’s probable that you’ve grown up wanting many things but never having the money to buy them.

Buying stuff gives you a lot of pleasure at first, but then the newness wears off and it ceases to give you the pleasure it once did. Scientists have figured this out and now you’ll see a lot of articles out there talking about spending money on experiences, not relationships. That is a very important jump to make in your thinking about money. However, I believe it causes people to think they should spend all their money on elaborate trips to the other side of the world. Or, by just going on a trip by themselves they’ll enjoy it.

I have gone on nice vacations and trips and it is very enjoyable in the moment. I’ve taken my family to Disney World (the happiest place on Earth), the beach, the mountains, big cities, etc. However, once you get back home that excitement is gone pretty quick. The daily grind in the real world wears off that experience and while you do have all the memories and things you’ve learned, you’ll just be living for the next time you can go on a trip to get that ‘high’ back.

When I was in college, I surrendered my life to Jesus. Shortly thereafter, I began hearing Him speak to me in an internal, audible voice. Kind of like having a conscience but much smarter and wiser. It sounds weird, but I’m just being honest. I used to daydream all the time of winning the lottery and what I would do with the money. Like my example above, I mostly dreamed of the things I would buy that would make me happy. However, one day, I clearly heard the Lord tell me “Aaron, don’t spend your money on things. Spend money on relationships.”

What does that mean?

Beyond buying stuff that thieves can steal and moths can destroy, beyond buying experiences that only last a short time, spending money on relationships is the ultimate way to make money bring you happiness. It’s not just experiences, it’s experiences with other people. How do I know this?

Studies have shown that ultimately, what brings us happiness is relationships. Spending time with people that we love. We could have had a bad day at work, sat in traffic for an hour, but if we spent some time that day with good friends and family, we would say we were happy that day. On the other hand, if we had a great day at work, sat in no traffic, got a raise but spent time with no-one that day, we would probably not be happy. We are relational beings and even if we are introverted, we still need to be around people to enjoy life and function properly.

Steve Wozniak, the co-founder of Apple, is a huge introvert. He spent most of his childhood alone, tinkering with things. But he still had parents in the house and saw them during meals and such. Before he founded Apple with Steve Jobs, he worked for Hewlett-Packard as an engineer. While at HP, he and the other engineers (also most likely introverts) typically worked alone. However, during breaks a coffee and snack cart was wheeled out in the open and the guys would come out of their offices and talk for a little bit. Steve, although being introverted, enjoyed these short times where he could hang around other people, but then go back into his ‘cave’ and do his work.

If you are extroverted, you have higher relational needs. But even if you are introverted, you still need to be around people at some capacity.

If being around people and relating to them is what truly makes us happy, shouldn’t how we spend money reflect that? Spending money on relationships can look like this:

• Quitting a job that keeps you from spending time with people you love.
• Using your lottery winnings to give you the freedom (i.e. free time) to spend time with people you love. This could mean working just a few hours a day instead of 8-12 hours and subsequently being too tired to do anything other than veg out in front of the TV. Working less so that you can take a more pro-active approach to parenting is a good idea as well. Nobody is going to raise your kids like you will, so farming them out to constant nannies, babysitters and daycare is not ideal if you have the money to be with them otherwise.
• Budgeting for more of your income to go towards eating with others, and paying for their meal if they can’t afford it. This may take away income from buying your dream car or the nicest clothes you can afford, but you’ll be happier this way.
• Giving to others (I will expand on this greatly in a future post).
• Buying a house big enough where you can have family and friends over more often.
• Plan a weekly cookout on the weekend and invite some people over. Friends, family, neighbors, etc.
• Plan for more of your budget to be spent on trips visiting friends and family.
• If you choose to work, spend more of your budget on paying others to do some or most of the housework. It takes a lot of time each week to cook meals, clean, wash clothes, wash dishes, mow the yard, etc. If you choose to completely quit your job, you may want to continue to do these things and you may enjoy it. However, if you don’t enjoy it and it brings stress into your marriage, you have the money now, so be free to spend it.
• Going out on a weekly date night with your spouse, and getting a quality babysitter for the kids if needed.
• Getting away once a quarter with your spouse for the weekend. Let the in-laws watch the kids, split them up and send them to friends’ houses, or pay a quality babysitter to watch them. You don’t have to go elaborate, but just getting a hotel room or bed and breakfast for the weekend and spending quality 1 on 1 time, one to four times a year goes a long way in your marriage. My wife and I cherish these weekends.
• Go on a vacation but let your kids take 1 friend each. Or take more extended family members with you. Or take some friends of yours. Pay for their expenses unless they are wealthy themselves.
• Spend money on quality counseling for yourself and for your spouse/family.
• Go to a conference that’s going to help you become a better person or bring your family/friends closer together.
• Plan a dads/boys campout or a moms/girls spa day or shopping trip and pay for anyone that can’t afford it.
• Invite a friend to breakfast or lunch on a regular basis (can be the same friend or a different one each time) and pay for their meal.
• Make a calendar of everyone’s birthday you know, and send them a birthday card in the mail. They won’t ever forget that someone remembers them each year.
• If you go out and buy something, say an article of clothing, buy two of them and give one away. It could be for a guy you meet on the street or someone you know. They won’t easily forget this.
• Pay for babysitters for a few other couples and go out (just the parents) for dinner every now and again. Being around kids all day is fun but having adult-only time is nice too.

Any other ideas? Put them in the comments below.

Note: Please don’t think that I’m suggesting you go out and buy friendships. I’ve known people like that before and you don’t want to do that. What I am talking about is using money as a tool to increase your happiness and the best way to do that is spend time with people. If money is the thing blocking you from having deeper relationships, then spending money in such a way that the relationship can grow is a great use of your resources in my opinion.

 

 

 

The Velocity of Money

Many do not realize this, but there is a psychological condition that goes something like this:

The speed at which money comes into your life, is the speed at which is goes out of your life

What that means is this: if you get money slowly, you spend it slowly. Someone who works diligently throughout their life, lives simply, and saves money each year, will spend their money slowly, over time. Someone who gets money quickly (movie stars, music artists, professional athletes, receiving a inheritance, lottery winners) will spend it just as fast.

What I’m saying, is that if you get a large amount of money overnight, you are likely to spend it all overnight. This is why you see professional athletes make millions of dollars over their career, and are broke as soon as they retire. Lottery winners are notorious for spending all their money within a few years.

But you aren’t going to be like that. Through education, you are not going to be ignorant of your human weaknesses and the ways that so many lottery winners have failed in the past. Through personal transformation and discipline, you are going to setup a budget to live by, invest the money wisely, and spend it according to the income your winnings provide each year. When you do this, your money will never run out, and will end up being a blessing for you and those you care about, instead of a curse.

An example of making money slowly is the excellent book, The Millionaire Next Door by Thomas Stanley http://amzn.to/2d1sG7N

The Way To View A Large Windfall

Most people, upon hearing they won the lottery, immediately think of the total cash amount as their new wealth number. In other words, if the lottery amount is $10 million, they think, wahoo!!! I’m now worth $10 million bucks!

This is the wrong way to view your money. 

Where I want you to shift your mindset to, and the way that wealthy people think about money, is to think in terms of annual income. It doesn’t matter how much is in the bank, it only matters how much I’m making each year FROM the money in the bank.

My wife loves British dramas. Especially the ones set in England 200+ years ago. You will notice when you watch these shows, that nobody talks about how much money someone is worth. You won’t hear someone say “you should marry that guy, he’s worth a million dollars!” What you WILL hear is “he’s worth $15 thousand dollars a year, marry him!”

For them, it did not matter what your total net worth was. The only thing that mattered was how much money you could make off of your investments each year. Back then, you didn’t keep a boatload of money in a bank, because that wasn’t secure. What you did was go out a buy a bunch of land and charge people rent to live on your land. Or, you started some other business with your money like shipping, printing or trade. What only mattered to someone else was how much money you could earn in a year from your land and businesses.

This is the right way to view money.

Let’s go back to the example of the $10 million lottery winner. If you take the cash value option, it’ll probably be worth about $6.75 million. You’ll owe taxes on that, 40% to the IRS and possibly another 5-10% if you live in a state that charges state income tax. For arguments’ sake we’ll just say you owe 50% in income tax. What you are left with is $3.37 million.

Should you go out and travel around the world, buy a new truck and a mansion? Not if you think about money the way I’m telling you to.

Let’s say you go out and invest that money and decide to take out 4% a year to live off of. That $3.37 million is really worth $135k per year in annual income. Of course you’ll owe taxes on that annual income as well, unless you invest it in municipal bonds or a tax-free life insurance product.

$135k/yr is nothing to sneeze at. That’s solid upper-middle class money. But hardly mansion money. Hardly travel around the world money, unless you find a way to do that cheaply. Hardly the type of money that’ll allow you to go out and buy a $60k+ new truck, unless you live simply in other areas of your life. You can certainly live a very enjoyable life on that income. It’s not enough to live in Manhattan with a family, but you can relax in Memphis, Tennessee in a nice middle-class home, drive new-ish cars, go on a nice vacation once a year, and never work another day in your life. Your fulfillment won’t come from buying a new toy every day, but from spending time with people you love and doing things you enjoy.

But this is the right way to think about money.

From now on, I don’t want you to ever think about your total winnings as what you are worth. I want you to think about what your annual income will be, THAT is what you are worth. In a future post, I will show in detail how thinking this way solves all sorts of problems that sabotage most lottery winners’ fortunes.

Back To Life

So you won the big money, got a lawyer, wiped your name off the internet, claimed the ticket, and got out of dodge for a while until the smoke cleared. Congratulations, now back to life.

One of the first things I recommend doing when you get back is to find a good counselor/psychologist. He/she can be faith-based or secular. Either should be good as long as they have the proper qualifications.

You’ve just been given a life-altering amount of money. It is most likely that this is more money than anyone in your family has ever had before. Money cannot provide you happiness in and of itself. Money is just a tool, but a powerful tool at that. What lots of money does is magnify who you are and what you do. If you are an addict, money will fuel that addiction until it destroys you. If you have a difficult relationship with family members, it will become even more difficult afterwards. If you are a generous person, money will allow you to become more generous than you ever imagined. If your marriage is good, lots of money can make it even better.

A good counselor or psychologist is worth their weight in gold after you get back into ‘normal’ life. They can help you navigate through all the new emotions you’re feeling. You may feel things that you haven’t ever felt before, causing both highs and lows that can be dangerous if not managed properly. Because money magnifies whatever is already there, it is imperative you work to make yourself as emotionally intelligent as possible. By having a sound mind, you will be able to make better decisions that help both yourself and others.

Along with meeting with a counselor, you will do well to surround yourself with people who have your best interests in mind. Friends and family members who never ask you for money are vital. Your lawyer, counselor, accountant and financial adviser are others. If you choose to live the life of a wealthy individual, other wealthy people you meet along the way who exhibit humility, kindness, love for others and seem to be emotionally strong can also set good examples which you can follow.

If you choose to allow your new wealth to give you more free time, I would highly suggest reading as many books as you can. There are so many books out there relating to money, self-help, emotional health, decision making, etc, that educating yourself will go a long way. Although reading alone will not transform your life, it will give you the knowledge you need to begin the transformation. Your team of advisers can recommend books to read. A few of my recommendations are:

Boundaries: When to Say Yes, How to Say No to Take Control of Your Life by John Townsend http://amzn.to/2ccD3ap
Margin: Restoring Emotional, Physical, Financial, and Time Reserves to Overloaded Lives by Richard Swenson http://amzn.to/2ccEd5m
Thinking, Fast and Slow by Daniel Kahneman http://amzn.to/2c8wG9x

Time For A Vacation!

Once you and your lawyer have everything setup, it’s time for you to high tail it out of town for a while.

Things might get a little crazy back at home, so removing yourself from that environment will do you a lot of good. If you’re like most Americans, you probably work more hours than the rest of the world. You probably haven’t taken more than a week or two off of work since high school or college, unless you are a teacher. It is rare for a business in the U.S. to offer a paid sabbatical, so most have never spent a big chunk of time away from work in decades. This causes burnout and people to feel consistently exhausted. They spend any free time they have wasting it all on TV and smartphones, because they are so drained from work.

Now that you have the money, use it to buy your freedom. I’m not saying you should quit your job, especially if you enjoy it. But I would highly advise taking a month off from the day you claim the ticket and go on an extended vacation. Use that time to rest. Read books. Spend time with your family. Discover a new place and see how it’s different from where you live. Remove yourself from your day to day world. I think you’ll be surprised how tired you were, how much different your thinking is, and how enjoyable it can be.

My wife’s uncle recently retired and spent the first month sleeping. He had plans for that month, but he had no idea just how tired he had been. Every day he’d wake up, eat, read the paper, then take a nap. He became worthless to the world. After that month, he started working on his PhD. That month off was all he needed to be recharged for the next challenge in his life.

This past summer I met a couple from Australia while I was in NYC with my wife. We were there for a whopping 5 days. This couple was in the U.S. for 6 weeks! They thought we were crazy for calling 5 days a vacation. “It takes a week or two just to detach yourself from work!” they’d tell us. And they’re right.

The rest of the world has a totally different idea of a vacation. Europeans regularly take a month off in the summer. My friends in Dubai spend about 3 or 4 weeks each summer visiting their family back in the U.S. I think it’s Americans that have it all wrong. Go on a nice vacation and rest up, cause when you get back you’ll have plenty of work to do.

This Guy Is No Longer Your Friend

The time between winning, and actually claiming the ticket with your attorney, can take anywhere from a couple of weeks to a few months. If you are like a lot of Americans, you can’t just quit your job and wait that long without a paycheck. So you’ll most likely have to work like normal. But one thing you MUST do during this time is this:

Wipe your identity off social media.

Delete your facebook, twitter, instagram, snapchat, personal blog, whatever. At some point, somebody is going to find out you’ve won. Then the word will get out. People you have never met will find you on social media and ask you for money. They’ll stalk you online and look at all your pictures of you and your family. You might even get threatened.

Don’t make it easy to find you, you know who your true friends and family are. The rest of the world can take a hike and they don’t need your contact info. You can find joy and fulfillment in other areas of your life besides posting cool pics on the internet. I will dive into much more detail on this in a future post. In the meantime, disappear from the internet!

I Got A Lawyer, Now What?

Great!

You’ve just completed a major milestone in your journey to a new life. But for whom much is given, much is required. It is at this point that you need to start acting like someone who is wealthy. You may or may not realize this, but wealthy people think differently than poor people. Or, at least they should if they want to stay wealthy. It will not happen overnight, but one of your main goals with your new life should be to change your mindset. An amateur would run into the lottery commission office, get their picture in the paper with a big check in their hand, and blow all the money on junk. A professional does it totally different. The first thing a professional would do is surround themselves with quality advisers that can help them get started on the right path. Your attorney will consult you through the many options that lie before you:

What are the tax implications? What can we do to legally avoid as much tax as possible?

How will you protect yourself if someone breaks their leg on your driveway and wants to sue you?

How will you deal with friends and family members that eventually find out the truth and want a piece of the pie?

Do you want your kids to get any of this money while you are alive? Who gets what when you die?

There’s plenty of things to talk about, and a good lawyer will walk you through this step by step. They will take as much time as needed to help you through this process. If you’ve won a major prize, say $10 million or more, expect to spend up to $25k-50k on attorney and accountant fees the first year. Trust me, it’s worth it. Professional services aren’t cheap, and getting wills, trusts, corporations and the like can cost a lot to setup. However, in the long run you’ll be glad you did the hard work up front.

Once you’ve done that, go here.