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What to do if you win the Powerball tomorrow:
Bottom Line: I tend to be too much of a realist to dream about lottery winnings but I recognize that it’s fun and I’m the weird one. Over the weekend a few folks asked me about the right approach and I’ve received some emails to that effect as well so I’ll address what I would recommend doing if you win the lottery tomorrow.
First:
- Take the lump sum not the annuity (especially if you’re over 40) that amount will be $278.3 million
Second:
- Net of taxes (because Uncle Sam always wins) is $208.725 million
Third:
- Allocate 10% to charity
- Allocate 10% to friends and family
- Allocate 10% to yourself and all of your whims (homes, cars, whatever)
Fourth:
- By now you’ve been charitable, you’ve taken care of those closest to you & you’ve provided yourself with a new life… it’s time to invest
- You’ll have $145.6 million left at this point and you’re going to use it to produce income to live off of for the rest of your life
Fifth:
- This is where it becomes more subjective due to asset allocation but I’ll offer up a suggestion
- Allocate 33% to high quality stocks that have more cash than debt and yield more than fixed income investments, invest a third in liquid fixed income investments, invest a third in high quality bonds. Even in today’s environment you’d hit an effective yield of around 2.5%
With this strategy in hand you’d maintain $145 million in principal that you would not spend (I don’t agree with any retirement plan based on principal reduction) and would derive a safe income of $3.5 million plus per year. Hope that helps (that would mean you’ve won!).
One more reason to buy – rents set to rise again:
Bottom Line: I’ve made no secret regarding my bullish nature regarding housing this year. In January I named 2012 as the year of the housing recovery. I also decided to move up buy personally. The housing market hasn’t disappointed. But yet some wonder if they should stay on the sidelines because they missed the bottom. In short I say no. I think it makes sense to buy if you have the ability to do so if you plan on being in place for three years or more. If you’re on the fence consider this…
Rents have risen for the past two years and are set to rise again.
- In 2012 rent rates rose an average of 4.1%
- In 2012 rent rates are expected to rise 4.6%
- Through 2015 rent rates are expected to rise by more than 4% per year
http://www.usatoday.com/story/money/business/2012/11/26/apartment-rents-rise/1727279/
Facebook & Apple now attached at the hip:
Bottom Line: You may now buy iTunes gift cards through Facebook and make recommendations to the person you’re gifting through Facebook. That’s good and well but I’m more interested in the implications. As Apple and Facebook further their partnership it makes it completely clear than Facebook truly lacks any interest in developing a phone.
http://techcrunch.com/2012/11/26/facebook-gifts-itunes/
Fake Facebook privacy notice:
Yesterday a fake new Facebook privacy notice was making the rounds on Facebook and many were buying into it. While you aren’t compromised if you fall for the fake notice – you may be part of the problem if you follow the instructions. The notice instructed users to post it on their page and share it. Well don’t. Facebook doesn’t have a new privacy policy (this week anyway…).
http://mashable.com/2012/11/26/viral-privacy-notice-facebook/
Intrade to be shut down to US customers:
Bottom Line: Intrade which has been riding a fine line of calling itself a “prediction market site” as opposed to a gambling site (which is really what it is), will no longer be able to operate in the US. Regulators are putting an end to its operation within the
