Are you pinning your financial future and retirement on winning the lotto?

As of the publication of this article, the Powerball is sitting on an estimated value of R113 000 000. Yip its not a typo, its a hundred and thirteen million rands. An obscene amount of money, which in anybody's lives can make a massive positive impact - or not. Depends on the financial choices one makes.

What are the odds?

According to an article published by Businesstech last year, the odds of winning the lotto is 1 in 20 358 520. (view article)

According to them the odds of winning is slow slim, that you are 20 000 times more likely to be born with an extra toe, than winning the lotto.

But hey, we all love the story of the underdog, and let’s be honest by having a valid ticket, still means that you always have a chance.

Spending the millions..

As much as the dream of great fortunes and sudden wealth is to most of us, one must still consider the psychological impact of it. You see having so much money is fantastic, but as soon as you see those zeros hitting your bank account and the euphoria wears off, the question is how will you deal with the pressure of trying to make the best financial decisions?

If you have never had great wealth, or a major influx of money, having such an amount will most certainly lead to higher stress, trusts and anxiety levels.

Research indicates that while there is initial euphoria, long term happiness levels of lottery winners often return to baseline. Winners face challenges like managing newfound wealth, leading to stress and anxiety. The 'Lotto Curse 'phenomenon heights the complex psychological effect of sudden wealth, underscored by importance of preparedness and support for lottery winners. - published by lotto.co,za

How does the taxes work on the millions you might ask?

Well initially the winnings are not taxed when its paid out. BUT -

as soon as the money hits your bank account and starts earning interest (which at those multi millions) can start compounding quite rapidly, and thereby you will start paying tax on it.

As soon as you have invested the moneys in a structured investment product after consulting your financial planner, there will be various taxes applicable like interest, REIT's, Capital Gains and also Dividends (foreign and local vary).

Happy Friday to you reading this article

Winning the lotto will and can certainly change the futures for anybody and their loved ones into the future, provided that they make the appropriate well thought through choices.

Stay safe, and May August be good to you and your loved ones.

Your financial planning partner.