The Powerball jackpot has risen to $700 million. Despite the minuscule odds of winning it, people, including Houstonians, spend a lot of money on Powerball tickets—and spend a lot of time dreaming about what they’d do if they won all that money.
Emma, a cashier at a Houston corner store, says people spend more on Powerball tickets as the jackpot gets bigger. “They spend, like, over a hundred dollars for one person only,” she says.
Emma reports the most she ever personally saw somebody spend at one time on Powerball tickets. “For just one time,” she says, “around two to three hundred dollars.”
Bob Fumagalli, Houston CPA, tells what to do if you manage to defy the odds and win. “First thing you have to plan on when you win it is what you’re going to do about paying the taxes,” he says. “And you’d better plan about 40% of your winnings going away there, before you start thinking about buying other assets.” He points out that taxes are typically deducted from lump-sum payouts.
With the remainder, Fumagalli suggests investing in “prudent stocks and bonds.” He advises you avoid becoming a limited partner in a partnership, since you won’t have a say in how your money is spent.
There’s always real estate, Fumagalli points out. “Real estate is typically a very safe investment,” he says. “And there’s real estate trusts out there – REITs, as they’re called. I have a lot of clients that indeed invest in that sort of thing. Kind of hard to lose money in real estate.”
Finally, Fumagalli says, you can invest maybe 5 percent of your winnings on riskier investments with potentially higher returns. Meantime, he says, be prepared to have more friends and family than you ever knew existed.