September 5, 2017

Like most people, I have often dreamed of what it would be like to have a lot of money, to become suddenly rich either by developing that great new widget or winning the lottery.   And I, probably like you, have sometimes wondered how much would be enough.

Throughout my life I have encountered, in various ways, a surprising number of people who have “come into” large amounts of money.   Always by some quirk of fate – timing for the development of an idea or some form of windfall (which ironically is the majority).  As much as having money has provided advantages to people I have seen just as many negative impacts as positive ones in their lives as a result.

According to the OLG many lottery winners end up broke – they spend their fortunes frivolously. But hey, I would still like to have a go at dealing with a large lottery win – better than the alternative – and seeing what damage I could do.


One of the first orders of business would be to find a warmer climate – perhaps Texas or Arizona – I really do not like the cold winters in the northern hemisphere.   Like most people I would definitely pay off my mortgage and any other obligations that may be outstanding.  Undoubtedly, I would acquire a different vehicle – but what would it be, assuming money was no object? 

I have a passion for horses – perhaps I would buy a small horse farm in hill country and a big diesel (fuel efficient) pickup truck, hmm, but then a comfortable luxury car would be nice too.  Living in the country would be great but it would also be cool to have a city condominium – a place to stay when going out for a night on the town and so on.

Vacations, I would love to go on some exotic vacations – Pacific islands, Asian paradises, historic European tours, Mediterranean cruises.   Ah, the life!  Wine women and song!  Of course I would have to take a partner along on all of my excursions, and who wouldn’t want to come along?

And where is my family in all of this?  I have three kids they would all need to get something to set them up, maybe half of my winnings split between them – that should be enough to get them on the path.


Alright so how much have I spent so far?

The farm in Central Texas – Hill Country – let’s say $1,000,000; horses extra – perhaps another $100,000 – good breeding stock included; the F350 dual axel for hauling my horses around – $75,000; a four horse slant load aluminum trailer – $75,000.City condominium in Dallas (why not?) – $300,000; then there’s the town car for getting around while in the city – $50,000; of course the vacations me and my new partner will be taking; Hawaii all island four week tour $40,000 including flights, tours, accommodations, etc.; the Asian tour – India, China, Korea, Japan 6 months and $100,000 later we’re off to Europe for a six month tour of France, Germany, Italy, Switzerland, and on to central Europe the Czech Republic – $150,000; and finally that month long Mediterranean cruise a mere $40,000 including all luxury accommodations and gifts for the family;

And the family, their share of the winnings – half of the original amount which was???  Well I have spent almost two million dollars so far so I would have had to win about four million to do what I have set out above.

So here it is, I just got home from the fabulous vacations and noticed that the bills have been pouring in – the guys who have been looking after the little ranch property have been paid by my personal banker while I was away so there goes a couple of hundred thousand dollars; Oh, and I had to pay the property taxes, the utility costs, food for my horses, maintenance costs for the fences that got broken and so on.

Hmmm I would need a reserve fund to cover all the incidentals perhaps another million?   If so, remember the kids got half so “one for me means one for them” so I had better have won about six million dollars.  Now, somehow, I have to figure out a way to not only live this lifestyle but sustain it.  As you can see, in my dream, I have just burned through a pile of money and still have ongoing costs. I need income!  Where is that coming from?  Let’s assume that I used to make $40,000 a year before I won the lottery and quit my job.  Hmm that wouldn’t be enough to support my new lifestyle even if my old boss would take me back!  So I need more money, some to invest, but how much?  Historically, over the last hundred years (adjusted for inflation) the stock market has only returned about 3% (see a much earlier blog for the data).   So $1,000,000 invested would return about $30,000 and I have to pay capital gains tax on that – well that’s not going to be enough either!   Even if I had won $8,000,000 (don’t forget the kids) to be able to have a million to invest.

O.K. so forget everything I just said – here is how my dream lottery win would really play out:   I would probably stay right where I am, board my horses, pay off my mortgage, upgrade my vehicle, invest my remainder money in my own small businesses and a varied stock portfolio including segregated funds and take a few more modest annual vacations. $1,000,000 would be fabulous – I’ll check my ticket in the morning!