How to Invest Lottery Winnings

Lottery winnings are often seen as a good thing, but in fact, a surprising number of winners in fact become bankrupt and divorced and are in a much worse situation than before they won. If you win the lottery, you must be extremely cautious.

If you have not yet won the lottery, stop playing the lottery and stop reading this article. You have a greater chance of dying in a car crash driving to buy your lottery ticket than you do of winning the big jackpot. Also, if your plan for retirement is to win the lottery, you need to do some major rethinking. If you are using the excuse that the lottery supports your local schools, go instead directly to your school and write them a check.
Ignore all the 3rd cousins 5 times removed and friends of friends that will suddenly come out of the woodwork. Don't buy them cruises until you have a plan!
Pay off all your debt, including your credit cards, student loans, cars, and house. Do not have a penny of debt to your name. If you have no debt, you cannot become bankrupt. Commit to never going into debt again for any reason. Do not under any circumstances use your lottery winnings to go more deeply into debt.
Start saving for retirement. As soon as you are qualified to open a Roth IRA (which you may not be in the year of the lottery winnings), put as much as you can into Roth IRA's invested in good growth stock mutual funds.
Save for your children's college education.


  • Make sure that you and your spouse are in agreement. Remember that divorce is a common result of winning the lottery!
  • Get the advice of a personal financial advisor who shares your goals and ideals.
  • Make sure you always have enough money for the tax man!



Copyright 2009 by Michael Nehring