Win the Lottery and Invest Your Money

Starting January 4th, 2009, Powerball is changing the way the game is played, and will feature bigger jackpots, more ways to win and more money!

The current game features 55 white balls and 42 red powerballs (55/42). Powerball will add 4 white balls and subtract 3 red powerballs (59/39). They say that adding more white balls will make for bigger jackpots, while reducing the number of red powerballs will make for more winners (better odds of picking the right powerball). They estimate 3.5 million more winners with the new format. Not $3.5 million more won, 3.5 million more people winning! That's pretty exciting.

For those that spend the extra dollar on the Power Play option might want to keep doing it. Any player that hits the 5 white balls with no powerball on one ticket automatically gets the 5X multiplier for the prize, making the $200,000 prize a cool million dollars!

The minimum guaranteed jackpot is also being raised from $15 million to $20 million. The jackpot is always reset to the guaranteed minimum after a jackpot win.

Finally, all prize levels will now be paid as a fraction to all winners at that level.

Check out the Powerball website for more details.

The newest lottery game in Arizona is called CA$H 4. Here's how it works:

Select 4 numbers from 1 to 26. Each ticket is $2 and pays off a jackpot of $10,000. If there are over 100 jackpot winners, the total get a split of $1,000,000.

4 out of 4 wins $10,000
3 out of 4 wins $25
2 out of 4 wins $2

For more information, visit the CA$H 4 page on the Arizona Lottery web site.

You can't bake a cake without breaking some eggs, and you can't win the lottery without playing.

I've always heard, and tend to agree, that the lottery is a tax for people who can't do math. Even so, IF you win, it may be worth it. So what's the best method to play?

Well, consider this. Play one ticket. Although multiple tickets each drawing technically offer you better odds, the improvement is microscopic. Shoot for buying one ticket per drawing. You may be throwing it away, but instead of tipping the barista at Starbucks, you can have a few minutes entertainment a couple of times a week. That's worth a buck/pound/euro.

If you want to play more tickets and have slightly more substantial odds, consider joining or creating a lottery syndicate. You can have an office pool, or join a more organized group. These are pretty commonplace, and the right people (or the right lawyers if you don't trust anyone) can keep the whole thing pretty straight. There's a great article here about group purchase of tickets. You have to share, but its better than not winning at all.

Other than that, consider how you pick your numbers. Some people pick common numbers because they think they are "hot" and some pick numbers that don't come up as often because they're "due". Both thoughts are statistically false. However, because people tend to believe these thoughts, they pick these same numbers, meaning if you pick these numbers, and you win, you're probably sharing the jackpot with others. I know, better than nothing, but since the odds are the same all around, try to pick numbers which you think others wouldn't pick.

I don't know how to do that, but think when you pick your numbers. Many people pick birthdays, for example. Since most lotteries select from more than 31 numbers, numbers 32 and up are probably often neglected by lottery players. If nothing else, remember to select a few higher numbers, to increase your winnings IF you win.

"If you really want something in this life you have to work for it. Now quiet, they're about to announce the lottery numbers" - Homer Simpson

Okay, so you buy a ticket, watch the drawing and despite the odds, you've won! How do you proceed?

You can redeem tickets where you bought them, but for millions of dollars/pounds/euros, *I* would go straight to the lottery office. Why trust your new riches to the guy at the crowded corner store or supermarket where dozens of people are watching you. More importantly, I don't think they'd know what to do if you brought in a ticket that big.

You can also mail the ticket in but

Ahahahahahaha

Would YOU let the ticket out of your sight?

I thought not.

So, get in your car. (I don't have one)
Call your best friend. (I don't have any friends)
Jump on your bike. (Stolen)
Take a bus. (I live in the wilderness)
Wow...and you won the lottery? Ok, call a taxi (I don't have a phone)
FIND a phone, call a taxi and have them take you to the lottery office (Don't tell the cabbie you won, but give him a nice fat tip).

There, the friendly lottery office personnel will validate your ticket, confirm your jackpot and start the process to getting all of that wonderful money into your account so you can buy a new bike, a car and maybe some friends.

Once your ticket is validated, you don't get all of that money from the jackpot. You have to pay

BUM BUM BUMMMMMM

Taxes.

Up to 50-60% of the value of the jackpot. You also may have to choose between a yearly disbursement of so much a year every year, or a lump sum, in which case you don't get the total of the jackpot. In either case, you have to pay taxes.

Set that up there. Have the taxable proportion taken out so you don't have to pay a big amount come April (or whenever you pay taxes outside of the US).

The lottery officials will take what's left and wire it to where you want it to go. Bring your checkbook so they can have the routing number so they can wire the money into your existing account.

That's about it.

Oh, they may want you to sign forms that allow them to publicize your winnings. This will be the beginning of your problems. Some lotteries probably have a clause in their legal micro print that states you must sign to claim your prize. If so, make them show you the rule. If you have a lawyer, you may want to take him/her with you when you claim so they can duke it out over all the details.

If you aren't required to sign to collect, don't sign. If you want to be famous, this is not the way to go about doing it, because you'll never hear the end of it. You will suddenly be inundated with long gone family members, has-beens, never-wases, hangers-on, "friends" and enemies. Keep it quiet as much as you can.

Now, you can go home and enjoy all that money, but maybe there are some other things you should do first.

I'm sure you want to go nuts and spend some money. I would too (and if you call me up, I'll help you spend it), but this trap is how a lot of fresh lottery winners turn into bitter old shells.

Let's get some perspective first.

Let's say you have a job, kids, a mortgage, debt, car payments, all that stuff.

The first thing you should do, is pay off all of those things that are a liability to you. Call up your mortgage company, your credit card companies, your bank, your Uncle Fred, anyone you owe money to and pay them. Just as interest works in your favor, all of those debts work against you, siphoning off money, and making you pay more in the long run. Get rid of em by paying em off. Now, you're out of debt, and you don't have to make pesky payments anymore. If you've won millions, this won't even dent your winnings. Neat!

Ok, next, quit your job. Seriously. So many people say, "Oh, I'm a normal guy, and I like my job, and I wouldn't know what to do with myself if I left my job." Bull. What, you don't have hobbies, dreams, travel plans, kids to raise, educate, feed and send to college, and maybe send away some day? If you want to do good, or do what you enjoy, do it on your own terms. Start your own business, or charity, or invest in your current job and get on the board of directors. Your job isn't big enough to have a board? Ok, invest in the boss, and be his buddy instead of his employee. Consult instead of being another cog. At any rate, if you must work, and if you currently spend 40-60 hours a week working, and I know you do, you should get your priorities straight and cut it down to maybe 10-20 hours a week. For your family, your friends, and your own sanity.

If you have kids, I'd even go so far as to say yank em out of school. A full time tutor is far more valuable, and if you have to socialize them, send them to a good private school where they will get a statistically better education and have better opportunities when it comes time to send them to college.

Okay, you've spent quite a bit on getting your life in order. Now let's concentrate on protecting your jackpot for years to come.

When we don't have money, we tend to invest money in stocks and bonds and our brother's new business idea, because we don't want our money to just sit there, we want it to grow. There's danger, but sometimes risk yields rewards.

The nice thing about being rich, is you don't have to take any risks. Don't get me wrong. A lot of the mega rich people today took big chances and continue to, even though they're rolling in dough. They started humbly with nothing, and now they're huge and successful. That's great, but the difference between you and them, is they know what they're doing, or at least, they figured it out, and it took them alooooooong time to do it.

You will probably fail, blow all your money, and be one of those sad, pathetic people you read about in the paper. Hey, if you want to invest in something you care about, or start your own company because that's your passion, don't let me tell you otherwise, but odds are, you aren't the rich guys we're talking about, you're going to screw it up.

So...let's get your money in the bank.

Interest rates aren't very good right now, but banks of all sizes will bend over backwards for your business when you have TONS OF MONEY, like you do now. Make a list of banks in your area, including your personal bank and talk to their bankers in person.

The first step is easy. Go to your personal bank, and sit down with one of their bankers, you know, the ones with the desk and everything. Remind them who you are by checking your account balance (BOING) and tell them you want a better interest rate on a savings account. What can they do for you? You WILL get a better rate than shmucks like me are getting. Before you go crazy and commit to their offer, tell them thank you for the information and go to the next bank on your list.

As you leave your bank, take some money out of the ATM so you can prove how much money you have (and go somewhere nice to eat for lunch). At the next bank, talk to a banker. Show them the ATM slip and ask for their best rate. You don't have to tell them you won the lottery. It ain't none o'they's cotton-pickin' business, to put it in hillbilly.

Note: Do NOT spit chaw onto their desk after responding in hillbilly.

Collect all of your offers and go home. Laugh maniacally at how much power you wield (and you wanted to keep your job, for shame). Compare offers. One should have the best rate. If your old bank is close to the top, you may want to stay with them out of loyalty, but business is business. You could also split your money between multiple places, to hedge your bets, if you like that sort of thing. In any event, backtrack to the banks that had good, but not the best offers, and show them the best bank's offer. Keep working until you get the offer you want.

Put your money in there. Done.

Now, some folks say "Why not buy a bajillion shares of Microsoft or Coca-Cola or why not buy XYZ co, the 4th largest producer of widgets?" Because its still a gamble. Why gamble to make some more than you are making now, when you can be guaranteed a little less. You already threw money away to win the lottery, so you should know when to stop.

A word about interest. Let's say you end up with $10 million dollars after taxes, debt, etc that you've already paid off. A good bank's interest rate for you should be in excess of 5%. Let's say the best you can do is 3%. Three crummy percent. That's earnings of $300,000 a year, just from interest on $10 million dollars. That's a lot of money, every year. If you make less than that now, you're already ahead of the game, and if you only spend from the interest, your principal, the original $10 million dollars, won't go down. You'll always have $10 million dollars, and maybe more, depending on how wisely you spend.

And that's on three lousy, stinking percent. If your bank offers you three, you could probably laugh at them.

Note:Due to the U.S. economy at the tail end of 2008, 3% might be a boon. Don't actually laugh at your banker, they hate that.

Imagine what you'd be earning at higher interest rates. And the above example is only on $10 million. What if you won more? You get the idea. Interest is powerful, and your jackpot gives you the power to wield that, um, power. So, don't be foolish. Make the rounds, get a good interest rate and sock that money away.

What's that? You haven't had a chance to enjoy your money yet? Okay. OKAY, already. Sheesh!

Now that you've claimed your prize, paid off your debts, and prudently invested your winnings, you want to blow off some steam. Hey, that's why all of that money is there. Even so, you have to be careful with how you spend your money.

Yeah, I'm gonna tell you how to spend it too, but not that much. I just want to give you a few points to consider, so you don't blow it all overnight.

First, keep in mind that money may not buy happiness, but does buy you TIME. When you have enough money such that you don't have to work to survive, you've just bought at least 40 hours a week that you would otherwise have to spend working for someone else to make money. You already HAVE the money, so now you get the time for free! Cool!

Once you understand that, you can realize that you shouldn't be in a rush for anything. Why hurry? You now have all of this extra time. You don't have to get chores done on the weekend, or get things in before or after work because weekends are when OTHER people have time off, and there's no work to interfere with your schedule.

Want to go back to school? You have time.
Want to start a business? You have time.
Want to help someone out? You have time.
Want to buy a new watch? You can tell people the time. (Sorry)

Having all this time means you don't have to be in a hurry, and because you aren't in a hurry, you make less mistakes. Start your new business or hobby slow, so that you get all the tools and paperwork and knowledge that you need. You won't have to cram classes into a semester to save time or money, because you can afford to take it easy.

I'm sure you can find things that appeal to you that fit this model. You have time, you have money, now do what you want.

That being said, what you want should probably not cost x% of your net worth. Some people like to say, "Well, if I win 10 million, I could blow a million without making a dent." Yeahhhhhh, true, but you'll be making less in interest on the back end, and spending carelessly leads to more careless spending. Better not get into a bad habit.

What I do advise, is getting out some going crazy money. Start with twice your household's yearly salary (if you can remember it now that you've quit your job. Right?) Let's say, and you probably don't fall into this category, but let's say your household makes $100,000 a year. Want to go nuts? Take $200,000 out of your new bank account.

Woohoo! We're going on a trip, new cars for everyone in the family, redo the house, take our friends out to dinner and day trips. Wheeeee, we're going to Disneyland, and I'm buying that huge 12th century thing, and (whew), we're going to buy a motorboat, yeah!, and some stuff, and, um, some other stuff, and, well, um, oh, OH, plasmas in every room! The basement! The treehouse! No treehouse? We'll build one in, with bridges between trees and monkey butlers, and everything...and, um

Top of the line computer?

Yeah, two, no three of those, and then...Cars!

We bought cars.

Oh, yeah...well, hmmm. Ok, I guess that's it.

Take your 200k or whatever it comes to and buy some nice stuff. Get it out of your system. If you don't make much now, triple or quadruple or even quintuple (yes, it's a word) the amount your household makes. Even so, $200,000 is quite a bit of money to throw around. Get it out of your system.

If you thought hard about stuff you really want now, not crazy stuff, but things you'd actually USE everyday and enjoy, other than to have a fleet of yachts or a solid gold baseball bat (it's funny, see, because you wouldn't be able to lift it, heh) then you will find that $200,000 is a lot of money.

I know, I know, you're saying you could spend it pretty quick. Stuff you would USE. 400 handbags, no. A Lamborghini for every day of the week, not practical.

No, go crazy, but be reasonable. You'll find that you run out of steam, and then you can settle into a better routine where the interest in the bank should be more than enough to maintain your lifestyle, and even save money on top of that.

Don't want to save? Your friendly banker will be MORE THAN HAPPY to calculate to the penny how much you could take out each month without eroding your principal. It's your interest, live it up!

May 3rd, someone won over $180 million on the Powerball. Congrats! Don't forget to read everything above for some common sense lottery investing and spending.

Saturday, May 17th someone won the $35 million dollar jackpot. That's two in one month!

Wow, someone hit the Powerball on May 31st, that's 3 in one month. The winner hit all 5 white balls and the red ball for $34.1 million dollars. I just hope they read this page.

It can be done!

Being in Arizona, we have lots of options for playing and sometimes even winning:

Scratchers - There seem to be almost too many scratch off tickets nowadays, but if that's your thing, the Arizona Lottery has dozens of games for you to play from $1 to $20 games.

The Pick - Arizona's original jackpot game, starting at $1 million and constantly growing until someone wins. Pick 6 numbers (1-44).

Pick 3 - Win up to $500 picking 3 numbers from 000-999.

Pick 5 - A newer jackpot game, starting at $50,000 and growing until someone wings. Pick 5 numbers (1-39).

Arizona Millionaire Raffle - A new game designed to create more winners per rotation. Only played twice a year, and at $20 per ticket (there are only 350,000 of them) it's an investment, but there are two million dollar winners and hundreds of other prizes.

Powerball - There are now 32 U.S.States playing in the Powerball drawing. Arizona was added in 1994. Pick 5 numbers plus the bonus number and win a jackpot starting at $20 million dollars.

See the Arizona Lottery Home Page for more info.

Playing Powerball is easy. Winning is hard.

Below are the requirements to win a prize and the odds.

5 white balls and powerball - Grand Prize - 1 in 146,107,962.00

5 white balls and no powerball - $200,000 - 1 in 3,563,608.83

4 white balls and powerball - $10,000 - 1 in 584,431.85

4 white balls and no powerball - $100 - 1 in 14,254.44

3 white balls and powerball - $100 - 1 in 11,927.18

3 white balls and no powerball - $7 - 1 in 290.91

2 white balls and powerball - $7 - 1 in 745.45

1 white ball and powerball - $4 - 1 in 126.88

Just the Powerball - $3 - 1 in 68.96*

* Note, the odds of hitting the powerball are 1 in 42, but the odds of just hitting the powerball are 1 in 68.96 due to the fact that hitting the powerball doesn't guarantee you won't hit on some white balls too.