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What If: Lottery Win

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At the original time of writing1 there was a Powerball jackpot in the US of a record $1.9 billion dollars. I don’t play the lottery as the probability of winning is too low, with this one for example apparently having a 1292,000,000\frac{1}{292,000,000} chance in winning. The odds of somebody winning is not much better either, as each of the numbers selected is not unique. You would probably be better investing that money into yourself.

That said, what would you do with $1.9 billion dollars?

Futurama’s ‘What If’ machine

The first problem to deal with is actually getting the money. In most Countries you lose about a half straight up due to tax. We’re essentially left with just $1 billion.

The next problem is, do we get it one cash sum, or multiple sums? Given the current rate of inflation, in 30 annual payments this money will be worth a lot less than it is currently worth. It may actually be worth taking a little less now but all in one go. It’s also entirely possible that the lottery itself is disbanded under some new law introduced and in 30 years time they are not even there to pay you - “tough luck buck”. As things currently stand, I would probably take the lump sum. This does now mean you get approximately $500 million dollars.

Now you still have the inflation problem, but you are empowered to deal with it. Where do you put this money to stop it devaluing over time? I have a few ideas on how to diversify this amount of cash:

  1. Property - Land and property tend to never devalue, they are fundamentally limited resources. In the UK for example as long as the immigration policy remains relaxed, there will be a housing crisis forever more. For land for example, I would pick locations that are rapidly growing and select land just outside those areas, betting on the fact that in the future they will likely want to develop there. For property, I would invest in not brand new, not really old, but well established properties (10+ years). The reason for this is that brand new homes devalue but tend to settle at their real price once they start to get a little older. You then get an idea of the culture for the local area, which drives the price.
  2. Precious metals - These tend to be relatively stable, with metals such as gold and copper forever being important in infrastructure and manufacturing. They will always be safe bets as we know all the fundamental elements and they are the best at their particular applications. I would not invest in artificial markets such as diamonds.
  3. Historic items - Some historic items will forever be valuable. Maybe not most art, but things of significance to the formation of culture. These are things that are hard to quantify and predict, so are a little more risky. I suspect we will see items from WWI and WWII become rarer and rarer, and their significance in European culture will become more and more profound as time goes on. Another historic item to be will be classic cars, especially as we move towards electric vehicles. There is something fundamental to a human hearing a large engine firing, hearing the explosions and roar power in your chest. Future generations will be fascinated by this, as all humans are by fire.
US Powerball lottery

Now I think I know where to store the majority of my money, what would I look to spend in the short-term? I think I would get the following:

  1. Each family member a home. They can choose to live in it, rent it or sell it. But ultimately it would offer them financial freedom. Assuming up to 50 homes, that is $50 million. I would consider this obligation complete.
  2. A home built from scratch. I want a home built from scratch designed to survive for over 100 years. I want it to be off the grid, bomb proof and secure, have secret compartments and an underground lab. I would probably pay up to $5 million for this to be built. This would also include a car, etc.
  3. Fund a small research lab. I would fund a small research lab to carry out experiments and ideas that I have. These would be ‘hacker’ types as our goal would be to just invent stuff, maybe create some spin-off companies. Let’s say we invest $5 million to see where this goes, at $500k per year over 10 years.

This would be $500 million minus $20 million over 10 years, bringing the total to $480 million.

I would give myself a ‘wage’ of $500k a year to spend on life. If I have 60 years left in me, this is $30 million, bringing us to $450 million.

The rest of the money would be invested to protect against inflation, where the intention would be to give my children and family comfortable lives.

It’s surprisingly tough to spend so much money!

  1. I got distracted a few times whilst trying to write this article.↩︎