What to do with money after winning Lottery

I could 100% live with this problem

 

I'm not sure why there are so many posters dismissing the value of $1 Million. if it's that small an amount, feel free to hand it over

$1 Million isn't what it used to be - sure, and it may not be enough to generate sufficient income for retirement if used conventionally, but $1 Million cash is nothing to be sneezed at, as it's 50% of the $2 Million net property asset position so many on here talk about being the magic number required to generate a 100K+ passive income for life ... so it's pretty handy help in anyone's language.

For those starting out, talk about a game changer...it would allow for the repayment of their PPOR debt, and that would transform their borrowing capacity... providing them with both the equity and the capacity to purchase several more properties before reaching their otherwise servicing ceiling.

For those with large portfolio's, it would allow them to pay down a lot of debt and improve their capacity as well... or if that wasnt necessary or helpful, they could recalibrate their taxable incomes /salary sacrifice structures and push significantly more into their Super or SMSF.....

There are significant multiplier effects, however it is used.


For me, if I were advising someone ( particularly someone starting out or wanting to improve their portfolio's cash flow) how to turn it into a river of passive income for life; subject to 3.2 Million borrowing capacity, I'd look to use it for 10 x 20% deposits + stamp duty for 10 x NRAS 400K purchases. At I/O rates of 4.6%, the properties would each generate @ 11K -12K CF+ tax free per annum . 110 -120K per annum tax free, or 11% - 12% tax free ROI on the $1 Million... increasing annually for 10 years. Added to a 100K salary, that's a potent 200K + tax free income for the next 10 years. Added to a 200K salary thats 300K + tax free for the next ten years, enough to pay down all the debt and be left with an unencumbered portfolio generating a large passive income for the rest of your life.

Subject to 2.56 Million borrowing capacity, it could be used for 8 x 30% deposits + stamp duty for 8 x NRAS 400K purchases
At rates of 4.6%, they'd each generate @ 11K -12K CF+ tax free per annum . Thats 90-1 00K per annum tax free, or 9% - 10% tax free ROI on the $1 Million... increasing annually for 10 years.

Even if your borrowing capacity only allowed for a more modest borrowing capacity, even 3 or 4 NRAS would do plenty to change your life... the rest of the money could be invested elsewhere in ETF's or similar... or into your super.

Pretty much well on the way to being set up for life, after that... as long as you are patient and let time and compound do its thing .... and as long as you dont go and buy a "keeping up with the Joneses" PPOR that you dont need, or depreciating assets you dont need.... you can do that later when you have a river of cash flow underneath you...

 

@euro73, very good advice all round, but especially this part here is of key importance.

Ps. Treat any windfalls like this, not just lotto but also redundancies, inheritances.... it all helps. I'm glad I pumped my redundancy money from Amex into existing debt first then a touch later into another IP... 40k redundancy payout turned into 240k over just a few short years time (thanks Sydney property market!)... even though I wanted to chuck money into a big holiday, a car and laser vision correction... (I havent done that laser vision correction just yet but it could be time to treat myself!)

 

Offset funds until sufficient private equity offerings emerge - max 250k per offer unless extremely low risk.

Meanwhile use cash flow from offset funds to reduce debt, so any positive funds could then be re-used to invest in shares.