Unfortunately, I am not Canada’s latest millionaire. No, I didn’t even win a couple bucks from those lucky scratch-and-win tickets that you can buy at the corner store. However, many of us have often entertained the possibility of plunking down a dollar or two in hopes of striking it rich with the latest lottery. It’s a question that many of us have asked ourselves at some point: “What would you do if you won the lottery?”
The Worst Investment Decision Ever
You may recall a post that I wrote some time back where I said buying a lottery ticket was one of the best ways to spend a dollar. For less than the price of a cup of coffee, you can open yourself up to an unfathomable level of riches, right? That may be true, but you also have to realize that lottery tickets are also the worst possible investment that you could ever make. Do not expect for a minute that you are going to win anything, so don’t even think about dumping your life savings into a lottery ticket. That said, there’s little harm in spending a dollar here or there, if only for cheap thrills.
Pick a Number, Any Number
Although the exact value of winnings fluctuates dramatically with each lottery, we need to limit this discussion to a relatively specific figure. Here in Canada, we have a national lottery called the 6/49. As its name implies, you pick six numbers, ranging from 1 to 49. The drawing also has six numbers (and one bonus number). Match the six numbers and you win the grand prize. For argument’s sake, let’s say you have a shot at $20 million.
As you can imagine, the discussion of what you would do if you won the lottery would be quite different if the prize was $1 million or $100 million. I think $20 million is a healthy medium for us to consider.
Would You Continue to Work?
Although there are some individuals out there who make a very comfortable living as writers, I didn’t get into freelance writing and blogging for the money. While money is certainly appreciated, the main reason why I got into this business in the first place is because I enjoy writing. I’ll have my down days, but for the most part, I enjoy my work.
If I were to win the lottery tomorrow and suddenly be showered with $20 million, I would not abandon my career as a freelance writer. More likely than not, I’d lighten the workload to a more casual level, but I would continue to write about the things that I enjoy, like personal development, cool new gadgets, and so on.
Do you enjoy your job enough that you would continue working if you won the lottery? If you’d choose to quit, how would you choose to occupy your time? What hobbies would you pursue?
What Would You Buy? What Wouldn’t You Buy?
Needless to say, $20 million is a very healthy sum and it would take a fair amount of thought regarding the purchases that I would (and would not) make. Choosing how to spend your money is not that different as a millionaire compared to a regular Joe; the scale just happens to be a lot bigger.
Personally, my first major purchase would be a new house. I’d want something nice, but not outlandishly overpriced. For this reason (and given Vancouver’s housing market), I’d probably be considering a house in the $1 million range. Believe me, that’s actually quite modest when it comes to Vancouver homes. Along the way, I’d probably buy some new furniture and a car, but it would be very important to exercise some self-control.
Realistically, it would be best to invest the vast majority of the lottery winnings. Think about it this way: Even if you were to invest $10 million in just a high interest savings account (given prevailing rates in Canada), you would still earn about $300,000 in interest alone. That’s without any consideration of stocks, mutual funds, and other more lucrative investment options. I think most people would be pretty happy with $300,000 in annual passive income. The question is whether you’d be able to exercise that level of self-control. There is a very fine line between ambition and greed, after all.
Not a Futile Discussion
In the grand scheme of things, most of us will never win the lottery in our lifetimes. You have a better chance of being hit by lightning twice than to “hit the big one” with most lotteries, so don’t bank on those lucky riches. Even so, thinking about how you would spend the money is a fruitful consideration, because this can demonstrate how you can (better) manage your current financial situation.
Do you invest most of your money in real estate? Do you live hand to mouth, paycheque to paycheque? What if that paycheque was $1 million? Would you live the same way (only more lavishly)? These questions can say a lot about your personality and your perspective on money matters. Think about it, then voice your opinion through the comment form below. I’d love to hear your thoughts.