With a $33 million Lotto Powerball jackpot up for grabs this weekend, many people are dreaming about how they’d spend the prize money.
Hosting Herald NOW this morning, Nadine Higgins said, “If I win, I’m not telling anyone, but there would be signs.”
Higgins was joined by financial advisor Mark Richardson, who said abrupt purchases like a flash new car and a $10 million house are signs not only that someone has won Lotto, but also that they’ve not thought through how to use their windfall wisely.
Ahead of Saturday’s draw, Lotto recommends purchasing tickets from retailers early to avoid the last-minute rush on draw day. Richardson promotes not rushing after a win either, encouraging people to take time to process the “lifechanging” news and plan how to best use their winnings.
“If you’re not used to this sort of money, you need a cooling off period.”
While cooling off, Richardson says people should really think through what they want from their win, considering: “what sort of income do I want to have? How much do I want to protect the capital over time? Who do I want to basically protect this capital for? Is it just me? Is it my family? Is it my kids’ families?”
While mulling these questions, and building a plan, Richardson suggests storing your winnings with a bank or institution as a means of “beating inflation”.
“I personally wouldn’t be looking to tie it up in a term deposit, maybe keep it in a cash light product.”
Host Higgins questioned whether Powerball winners would be overly concerned beating inflation, asking “I’ve got $33 million. Surely that’s more than I can burn through in my lifetime?”
Richardson warned people need to be " very, very careful" with big wins, because without proper pecuniary planning, you can burn through it.
“With easy money in like this, it can be easy money out.
“If you’re all of a sudden going, ‘we’re going on a spending spree’ and you are going to buy big ticket items like very expensive houses, expensive cars, you’ve got to realise big ticket items come with big bills as well, and servicing those items.”
When coming into serious amounts of money, Richardson encourages drawing on the counsel of people who are used to dealing with this type of money - financial advisers and financial planners.
“They understand what it can do and what it does.
“You will need sound accounting advice. You’ll need sound legal advice because that’ll determine actually what sort of structure you want to actually structure your wealth around... You haven’t had to think about tax at this level and what are the implications on that pot of money as well. So, you need to go and see a number of professionals.”
Richardson suggests spreading the love in terms of any investments as well, telling Higgins, “That’s probably the biggest thing is, don’t just all of a sudden go, ‘Well, it all goes into term deposit, or it all goes into property, or it all goes into, you know, the S&P 500.’
“You will want to be diversified and therefore the tax treatment on those types of assets will all be a little bit different as well.”
Richardson joined Forsyth Barr as an investment adviser in 2023, pivoting from a career in high-performance sports, television, and radio. He is registered as a financial adviser and is accredited as an NZX adviser.
The biggest Powerball win of the year so far saw an Auckland player awarded $23.3m after purchasing a ticket through MyLotto in April.
For the Powerball jackpot to be claimed, a ticket holder must get all six Lotto numbers correct as well as the added Powerball number.
Ticket holders can see immediately if they have won if they purchased a ticket through MyLotto. Prizes of $1000 or less are automatically credited to the account.
For prizes of more than $1000, winners must complete an online prize form.
Winners with a physical ticket must still visit a Lotto retailer to claim their prize.