Poll: Poll: The £1000 a week for life or 1million lump sump....
- Thread starter SPG
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you have totally forgotten about inflation and interest/investment. 1k a week is the rubbish option.
If you were to take the rather strange option of just putting 1 million in a bank rather than invest, there’s compound interest to take into account too.
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I work out the growth needed as just below 3%, using your inflation figure of 2.25%. 3% would turn £1m in to £11.325m over 81 years. Adjusted for inflation, that's £1,792,572.24 in today's money.
Thanks for your good detailed posts explaining what I meant, I was too lazy to explain why investing was better in detail.
The lottery company also probably know having the cash in assets is better as well hence even offering the deal to the girl. Not to mention we all assuming the company will never go bust, because if it does those 1k a week payments stop.
Wealth is a perspective, I would rather not have a penny in my pocket and have all the love in the world.
People get too hung up on wealth and achievements, just live.
Grand a week would do me fine.
The thing to remember here is a lot of people work in a job they dont want to do. I e.g. enjoy working but as long as its something I enjoy, I dont like grindy type work, especially work that is physically demanding. People do crappy jobs because they need to put food on the table, so when people say becoming wealthy does not buy happiness I think they are looking through tinted glasses, assuming the lottery winner is a highly paid doctor or something. However if you are unemployed stuck in a rut, or stuck in a job that you have to do rather than you want to do, maybe also the iceing on the cake is you have debts you struggling to service never mind pay them down then coming into wealth is clearly going to make you happier and enjoy life more.
The trick is then to manage it all properly, and also try to keep yourself busy so you have a purpose everyday rather than just waking up to have parties and what not. Investing in property for a start not only is a sound financial decision but also you immediately have work to do in managing those properties, you can do work you want to do, not what you have to do, it can be voluntary work as well. No stress of having to worry about claiming benefits, dealing with debts, worrying about which bill doesnt get paid this month and more. If you have children been able to keep them happy without hard choices is priceless. I have known couples who split up purely because of financial stress.
I think the hardest problem to deal with if you suddenly come into wealth is how to deal with your family (siblings and parents), do you tell them at all, do you offer them any of it, I dont know. The problem with offering them a piece is they may keep coming back for more treating you like an ATM. The approach I would probably take is perhaps tell them I am a bit better off, but not the entire truth, and help them when I see they genuinely need the money, maybe occasional treats but not giving them any lumps of cash just to spend.
You can only mitigate the inflation if you received all the 1K a week payments in a lump sum up front and started investing it it from the beginning. The whole point is that in the future that 1K is worth a heck of a lot less, so if you try and invest a much lower amount ion the future it obviously will lead to much lower returns.
And that also ignores the fact that with 1M up front you have a lot more investment choices and better rates. For example you could buy several apartments to rent out and get rental income over 1K a week + have the benefit of a hopefully increasing asset.
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I would take 1Mil lump sum because I would spend cash amount on a house then, 1000 a week from then on withdrawal and invest the Reston properties. (Not as simple as that but the concepts there).
It is also tax free, anything you invest is subject to tax. So your one million is losing straight away. No matter what failed invesrment you pick.
At her age I buy a house by the coast have it paid off by the time I am 30, part time job nice camper van , 3 or 4 nice holidays a year.
Simple things are food on the table shared with friends family.
At her age I buy a house by the coast have it paid off by the time I am 30, part time job nice camper van , 3 or 4 nice holidays a year.
Simple things are food on the table shared with friends family.
The buying power of £1000 has decreased by 94.15% over the past 50 years.
Just give that a thought for a moment. What sort of lifestyle would you have in later life if the same thing happened over the next 50 years? What if inflation is greater? Would you really want to gamble your livelihood on inflation being significantly lower than the historic average?
It doesn't matter whether you pick the lump sum or the regular payment. Either way, you have to either invest significantly, or keep working, or both. Neither sum, even in GBP (as opposed to the original CAD), is enough to passively set someone up for life.
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Indeed, everyone assumes you are taking that 4k a month and just spending it all. It is a great sum that could see you to your end of your days quite easily.
I.e not having to get up at 0630 on cold wet February morning to go to work EVER !
You do not have to live the stupid Instagram lifestyles the millennials think what real life should be, in the middle of London etc etc.
I.e not having to get up at 0630 on cold wet February morning to go to work EVER !
You do not have to live the stupid Instagram lifestyles the millennials think what real life should be, in the middle of London etc etc.
1 million you have no idea what $1000 a week is worth in 30 years time, if I had 1 million bought 10 houses and rent them out for let's say an average of $600 a month, then I'd be making more and also my property's would grow with inflation.
It is definitely a reasonable assumption that a part of the £1,000 a week would be invested. But after accounting for inflation and withdrawals, it might not necessarily result in a groundbreaking amount of money being accumulated at the end of a lifetime. If you also account for scenarios in which not enough money has been accumulated/saved to pay for the 'unexpected', debt might be taken on and accumulate, in which case the picture is even less rosy with financial ruin being quite possible.
I’m afraid you’re probably mistaken there mate, inflation would make that 1k considerably less in the not too distant future.
1 mil spent wisely would guarantee comfort for life and early retirement, especially if you’re already a home owner with a significant portion of your mortgage paid off.
If accurate this both are articulately pertinent to my point, and also rather terrifying!
I really hope you get to do those things then mate
Apart from the fact that you literally have no guarantee that this would be the case. Who knows what might happen with the economy. Especially with Brexit etc. inflation could run rampant, we could end up in a Zimbabwe situation. You simply don't know. Hey, remember when people could afford houses back in the day, for example?
Soldato
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I know the tax implications are better for the £1000 a week, but I'd still take the lump sum and invest it. Even with any taxes incurred and inflation I can't see how £1000 a week would work out more beneficial.
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Taking the £1000 a week and using this to live on, keeping on working then paying in the maximum allowable to a pension from my salary whilst claiming 40% tax relief from the government.