As of late 2021, 45 of the 50 United States have some kind of state-run lottery, and so do three American jurisdictions—the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Before restrictions on online gambling and sports betting started fading, the lottery was many states’ only legal gambling method outside of casinos. Many of those opposed to gambling can’t argue with the revenue raised for education, public works, and other necessities.
As the jackpot grows, so does the temptation of buying a lotto ticket. Almost every adult gets sucked in at least a few times. Whether you’re a daily buyer or indulge on special occasions, it’s worth knowing what to do in case you get lucky.
There’s nothing sadder than getting rich quick and squandering it all in a matter of months. Avoid the pain by taking a gander at these smart ways to invest your winnings.
1. Spend on a Debt-Free Future
If you’re lucky enough to win the daily lottery, one of the first moves you should make is to invest in your future by paying off debts.
Saying goodbye to credit card debt, college loans, car payments, medical bills, and more saves a lot in the long term. You won’t have to deal with ever-growing debt from accruing interest. As a result, you’ll have more money to spend on things that matter to you.
2. Invest in Friends and Family
Though you have to make your name public in some areas, “Don’t tell anyone!” is a good rule of thumb that lottery winners should heed. Yet, that “anyone” doesn’t often apply to loved ones. After all, it’s kind of hard to hide that you’re millions or even billions of dollars richer from those closest to you!
Many lottery winners choose to help family and friends with their winnings. With so much money at hand, you can pay loved ones’ debts after zeroing your own. You can buy a house or houses for family and friends, and start one or more college funds.
No matter how much you want to help, be careful if you want to have money for a long time. It’s common for random family members you have never met to come out of the woodwork once they hear you won the lottery. They might hound you for money and try to guilt you into giving them large sums.
3. Save for Emergencies and Retirement
Before rushing to quit your job, put a good chunk of money aside for emergencies and retirement. You wouldn’t want to stop earning money after winning the lottery and find that you’re out of cash once you’re at retirement age. You might be able to find some kind of work at that point, but it may be a challenge depending on your health.
When you have new millions lining your pockets, don’t plan emergency expenses based on your current living situation. Consider whether you’ll upgrade your housing, buy a new car, get a new pet, or take on any other recurring expenses. Include those costs in your planning.
Basic emergency fund advice recommends having at least three months’ worth of expense money ready at all times. There’s no excuse for a lottery winner to stick to the minimum, as you never know what costs could arise.
Medical bills in particular are hard to predict and expensive to cover. If you save the minimum recommended amount, you could still be blindsided if tragedy strikes.
Putting money aside for retirement after winning the lottery can be tricky. You should consider future bills for retirement as well as for emergency savings. Working with a financial consultant is key to projecting those future costs.
Err on the side of caution when putting funds aside for your post-work years. Don’t forget that your lifestyle might change a lot with your newfound wealth. If you want to enjoy the same luxuries through the end of your life, you’ll need to save a lot—a professional planner can help you figure out how much.
4. Invest Lotto Ticket Money in Your Community
While a large portion of most states’ lottery funds goes towards local causes, you might also invest some of your winnings in your community. You could give to charities, colleges, or even start a nonprofit organization.
If you’re not the most charitable person and goodwill alone isn’t enough of a reason to invest in causes, consider the tax benefits. Work with a tax advisor to figure out what percent of your contributions you can deduct.
5. Buy Stocks and Alternative Investments
There’s no denying that conserving lottery money is a challenge, and growing it might seem harder. Yet, if you make a few wise investment decisions, growing your wealth could be as easy as sitting back and waiting. Since cost is no object, hire professionals to pinpoint the best investment solutions for you.
Don’t worry if the stock market seems like a confusing alternate universe to you. A stock expert can help you navigate the market, but you can also invest in countless alternatives.
It’s important to diversify your portfolio to minimize risk. Many investors focus on stocks and keep other investments on the side. Yet, there’s nothing wrong with emphasizing alternatives and making traditional stocks your side project.
Alternative investments can look like almost anything under the sun. Gold, other precious metals, jewels, and coins are all common choices. If you’re technologically-minded, non-fungible tokens (NFTs) and other kinds of cryptocurrency are fast-growing investments to consider.
You can get far away from the monetary world if you’re so inclined. Wine is a popular investment as it’s always a hot commodity. Success with wine is possible whether you learn to pinpoint and collect rare varieties or invest money and time in your own vineyard.
Other collections like stamps, action figures, art, and comic books are good investments if you educate yourself about what has value. Whatever your interests are, chances are there’s a way you can turn them into wealth-growing investments. You’ll have all the time in the world to learn and choose a path, once lottery winnings line your pockets.
Win at Life Every Day
Now that you know these great investment ideas to try after buying a winning lotto ticket, you’re well-prepared in case your financial dream comes true. Let’s face it, though: You probably won’t have big lottery winnings anytime soon.
In the meantime, start winning at life with all the handy advice on this site. Click on another article and discover new ways to defeat everyday challenges.