Advice for Powerball lottery winners
Winning the biggest lottery of all time may have its pitfalls
What can you buy with $1.5 billion? Or more like, what can't you buy?
That's what ticket-holders across North America are dreaming of as they get set for Wednesday night's Powerball draw — even as the odds on winning at last count were 292 million to one.
Many Canadians have been buying tickets for America's biggest-ever lottery prize, but what would a Canadian get from the jackpot? And what should they do with the windfall?
First off, although there is no tax on lottery winnings in Ontario, a Canadian or non-American must pay 30 per cent tax on winnings, and there may be a state tax on top of that, said Wolfgang Klein, a senior vice-president and portfolio manager at Canaccord Genuity in Toronto.
Klein has advised lottery winners in the past, though he's not exactly of fan of lotteries. The fact that there is a lottery for $1.5 billion, he said, is "morally incorrect."
Winners often come to him feeling very guilty, knowing that there are people who need money, who work hard for it, and they have simply lucked into it. They feel pressure to help their families, to give away a good portion of it.
There are also the cautionary tales of lottery winners who become destitute only years after their windfall: "$2 million, $4 million — it can go quickly," said Klein.
Lottery winners buy too many big-ticket items and then find it difficult to keep up payments or upkeep on things like large houses or foreign cars. His advice to avoid future bankruptcy: "invest the money and eat the fruit from the tree."
The best place to store large sums of money, he said, is in securities like treasury bills.
World Class Bakers on St. Clair Avenue West has been giving away hundreds of tickets for the Powerball lottery to customers who spend more than $20.