This week I finished another pass through AoE. It was mostly polishing things and making changes based on feedback. I'm pretty much to the cover stage. I'm still not sure exactly what it will be. The other day I mentioned I paint a little as a hobby, but I'm not an illustrator. I'm also not good at painting the human figure and might want to put humans in the middle or background. Since it's a spy type book, I had a thought that maybe I could paint a figure with a hat pulled down low like you sometimes see on spy books. That way the jawline would be detailed, and that's a lot easier than a complete face. Another idea would be a silhouette of a side profile. A closeup side profile might work, too. I'm going to have to experiment and test something out and see if I can actually do it.
A few weeks ago I had a blog titled What If You Won a Fortune? that was a more realistic look at some of the taxes, challenges and expenses of wining a smaller amount like $5mil. I don't play the lottery, but I like seeing people win. I occasionally like to think about what I'd do if I won a fortune. Since that blog, I've watched some interviews with lottery winners to see what they had to say about their plans.
Some people don't know what they're going to do. I can understand that. Buying a house is a logical first choice as is traveling. How much travel? Would you want to buy a house that would sit empty for what might be weeks at a time? Is that safe? Where would you live? The choices would be endless. Would it make more sense to rent while deciding precise plans? It would be a huge adjustment with an overwhelming number of decisions.
I saw at least two winners who put the money into a trust. I'm not at expert on that, though it looks like it has some interesting options for transferring money to relatives. I saw a few winners who hired lawyers and a financial management company. The people who did that didn't claim the prize right away. They waited until everything was in place, which could take a number of days or weeks. I thought about that. They could have claimed the prize, put it into an interest-bearing account and set up the financial team while drawing interest. A winner in the UK said he was earning £800 a day from interest. Today that would be just short of $1,078 a day. That would make quitting work and driving around to meetings a lot easier while putting a team together.
Why wait to start earning money? In the blog I linked to, I referenced the federal tax rate on lotteries as being 39.6% with 25% due immediately and the rest at tax time with state taxes on top of that. A normal savings account(fraction of a percent) or money market account(1.24% perhaps) would pay a low return compared to an investment account(6% minimum). By waiting they're maximizing the interest payments and offsetting more of the taxes. Basically, they would get to keep more of the money and use the tax money they owe to earn interest in the meantime. Waiting a week or two to be able to keep more of the money makes sense to me.
So, if you ever won something, hiring a financial management company before claiming the prize would let you start earning good returns from day one while mitigating taxes. Even if you never win, learning more about what people who win do will enable to you better manage your money. It's worth it to look into a little. It gives you ideas and options you can use today you might not have known about.
Have a great weekend.
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