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Powerball Lottery Winner: How to Generate $3.8million a year...FOREVER

Updated: Apr 5

Have you ever wondered what you would do if you won a Powerball Jackpot? I know that I have, and I was looking at this article by CNBC that came out on January 1st. It's a $237 million Powerball Jackpot. It's talking about what the tax bill would be, and I thought.... if I won $237 million what would I do with that money? I know, because I've thought about this question many times.

Learn how by just using some of the money you could not touch the principal, and generate over $3.8 million a year in income, and that's still leaving well over $20 million to spend and do whatever you want with.

Watch the video below:

The CNBC article starts out talking about how much taxes you would have to pay on that jackpot. Now if you aren't familiar with the way that jackpots work, when you win the lottery the number that gets plastered everywhere is not the amount that you would actually take home. So that $237 million, that's if you choose an annuity. An annuity is when they pay it out over let's say a 20 or 30 year period. (In this case it's 30 years). Most people are going to choose the cash option.

The cash option is actually $160.7 million.

Still a lot of money. I know.

The article talks about how 24% would have to be withheld for your federal taxes. If you aren't familiar with the way withholding works, just because an amount is withheld- meaning taken out of the payment, that doesn't mean that's what you actually owe. By making $160.7 million, and lottery winnings counting as income, you'll be in the top 37% tax bracket.

So what I calculated is that after paying your 37% federal taxes on your $160.7 million dollars in winnings, you'd pay about $59,459,000 million dollars in taxes.

Now that's only federal taxes.

Depending upon what state you live in, you might have to pay state taxes too. Now I live in Florida, so I'm not going to talk about state taxes at all because I won't have to pay any state taxes.

$160.7 million and $59,459,000 million dollars in taxes...leaves us with $101,241,000 million.

So what are we going to do with that money?

1. $25,000,000 into Municipal Bond Fund (VCITX)

Right off the bat to keep things simple I'm going to put $25 million in a municipal bond fund. Why am I going to put it in a municipal bond fund?

If you're not familiar, municipal bonds are federally tax exempt, which means you won't have to pay any federal taxes on the income that is generated from those municipal bonds.

That's a good thing.


If you buy municipal bonds in the state in which you live, then they're also state tax free and possibly local taxes as well. Now given that I live in Florida there are no state income taxes, so I can invest in any state's municipal bond funds and not have to pay state income taxes on it.

I know that California has some pretty solid municipal bond funds, so I'll take $25 million of that money, put it in some California municipal bonds, and target about a 4% income. So I'd be pulling out about one million dollars a year in income from that $25 million portfolio.

Now here's the cool thing: those municipal bond funds are totally accessible. So at any time you could take money out or add more, and it becomes basically a savings account that's invested that you're making $1 million a year in income on.

Assuming that you're making at least that 4% every year you're never touching the principal. So you're making a $1 million a year... tax free, not touching the principal.

Now keep in mind we're talking about investing first, and not spending it. I'm sure there's a ton of things that you would spend the money on, probably a lot of things you would invest the money in too.

Leave a comment below and tell me what would you invest or spend that money in if you won that $160.7 million cash prize.

2. $10,000,000 into 69 Unit Apartment Complex

Next thing we're going to do is put $10 million into a multi-family real estate apartment. I actually found a pretty cool one here right in Orlando. It's a 69 unit apartment building. It's for sale for about $10.35 million. I'm assuming that as a cash deal you would probably negotiate it down to $10 million , so let's say we'd spend $10 million on this deal. It says it's got a 7.92% cap rate. To keep things simple, that's basically the amount of income that you can generate after certain expenses from that property. Let's just call it 8% so that we can keep the numbers simple here. So at a $10 million investment, and a 8% cap rate. We're going to pull another $800,000 a year from this investment.

In this apartment building I would have a property manager that I'm paying a salary to. It's probably already calculated in the cap rate. If not, maybe you'll make a little bit less money. You're not really going to have to do much with managing this property. So you're going to be able to sit back and just collect the checks, which is a very nice thing.

So we still have 65 million dollars left to spend, and we're already going to have $1.8 million dollars a year in income AND we're not even touching the principal yet.

I'm excited!

3. $7,500,000 to buy a Shopping Center

The next thing I'm going to do is I'm going to take $7.5 million dollars and I'm going to buy a shopping center.

Yes. I said a shopping center.

I found a retail shopping center that's a cool shopping center here in Orlando where I'm currently living. Now, we want to be strategic about this investment. Amazon is shutting down a lot of businesses, so we want to make sure we're buying a shopping center that is pretty Amazon-proof. (Meaning a store or concept that won't be put out of business by people buying the products on Amazon. This could be food, or service related businesses, ideally.) This shopping center that I found is in Orlando, and it's offered at $7.5 million dollars. Again, we would probably be able to get a better deal, but let's just go with that $7.5 million dollar number. The shopping center is at 100% occupancy, which means that all of the units are rented. That's a very good thing. It has a 7.6% cap rate. So I'm just going to use 7.5% to make the numbers easy. At 7.5% on this property we're going to generate another $562,500 dollars a year in income. We are already at over $2.3 million dollars a year in income, we still haven't even touched the principal.

Now we are left with about $57.5 million dollars. We've already paid our taxes, and we are making smart serious investment moves.

4. $10,000,000 into residential real estate

Next, let's take $10 million dollars and invest it in residential real estate. Why residential real estate? We want to be diversified in the real estate that we're investing in. Our investments so far already include a multi-family apartment building, commercial real estate, and now we're going to do some residential real estate. I'm going to gather a team or realtors we're going to put together a committee, and a set of criteria and we're going to find a ton of residential real estate options to generate income. Then I'm going to hire a property management company, maybe even two property management companies so that I make sure I don't have all my eggs in one basket. At that point you can start your own property management company, and then pay yourself to manage your own properties if you wanted to. But let's not get crazy here.

All right. With $10 million dollars in residential real estate. I'm assuming that we can get at least a 5% rate of return on that real estate. So we're generating another $500 thousand dollars a year in income. Again, we have not even touched the principal of this money. Based on how we're pulling our income thus far, we are just taking out the dividends/income that are generated by these investments, so none of the principal is being touched.

With all of the money that's invested, let's make the assumption, that the value of the assets continue to grow over the long term- so in the next 20, 30 years even with our distributions we've been taking....our assets have increased our overall wealth.

So now we've got $47.5 million dollars left to spend.

5. $25,000,000 into Vanguard Payout Fund (VPGDX)

I'm going to take another $25 million dollars and I'm going to put it in a vanguard fund. This vanguard fund is a combination of stocks, bonds, and alternative investments. It specializes in targeting to create a 4% income from that portfolio.

So another $25 million dollars at 4%. You've got it. It's another one million dollars a year in income, guys. A million dollars a year.

At this point we've got about $23.7 million dollars left and we've invested about $78.7 million dollars. Now we've got OVER $3.8 million dollars in annual income that's being generated from our investments. This leaves $22.5 million dollars left to spend on whatever you want. Buy your dream home, buy multiple homes, dream cars, donate to charity, go on vacation, give money to family. Do whatever you want with the money because you're still going to have a $78 million dollar investment portfolio that's generating over $3.8 million dollars a year of income for yourself.

To give you some perspective, $3.8 million a year translates to over:

$321,000 a month in income OR

$74,000 thousand dollars a WEEK

What could you do with $74,000 in income, a $78 million dollar portfolio, while still having $22.5 million dollars that you may or may not have spent?

Guys, this has been fun...


Now back to reality!

If you win the lottery and follow this plan you'll stay rich forever. (wink)

Because we've all heard that about 70% of lottery winners wind up ending up broke. I actually found a statistic that out of Florida jackpot winners over 70% of them five years later didn't have a dime left of the money.

Here's why:

When it comes to financial success it's all about your belief system and your mindset. We all have a mental programming, similar to a computer of a level of financial status that we are able to handle.

How many times have you met people that have made good investment, lost it all, made a good investment, lost it all, been in debt, out of debt, been in debt, out of debt?

It becomes a vicious cycle because they haven't changed their internal financial programming, their belief system.

Our financial programming is like a thermostat. It's set for a certain "temperature". If someone sets it for 70 degrees and a window is left open letting hot air in...sure it will temporarily go up in temperature. Then the thermostat kicks in to bring it back down to 70 degrees.

It's just like someone who pays off a bunch of debt, only to figure out a way to be back in debt in a month, or 3 months, or a year. Or someone who figures out a way to really kill it financially for a while, and then "somehow" loses it all.

When you change your internal thermostat...that's when everything will start to change.

Make sure to SUBSCRIBE and soon I'll be providing some really powerful free strategies on exactly how to change your financial thermostat to achieve sustainable financial success like you've always wanted.


And when you win the lottery, give me a call. I'll make sure that you do the right thing with the money, and help you re-program your financial thermostat.

I'll see you guys next time.

This information is for educational and entertainment purposes only. It's not investment advice. So don't try anything crazy.

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