What would you do with $34 million?

Jayne and Mike Edgington, with Jayden (left) and Sam, consider what they would do if they won the huge Lotto draw. Photo / Steven McNicholl

Mike Edgington's Lotto fantasy list starts off simply - "house, car, boat, and some for Christchurch".

But it has inevitably expanded by the end of an hour-long brainstorming session with wife Jayne.

Paying off the $200,000 mortgage on their Great Barrier Island investment property is a given, but why not buy a helicopter to get there?

"We've got a place over there that we don't use very often, Mr Edgington said.

"That sort of thing is invaluable. And if you've got the sort of money to do it, it makes such a difference."

The Weekend Herald asked the couple, who rent a home in Auckland's Royal Oak with their sons Sam, 5, and Jayden, 3, to tell us how they would spend the $34 million if their ticket won tonight's big prize.

We then ran those ideas past financial adviser Michael Lang from New Zealand Funds Management, who explained how they could be best realised.

Mr Lang often deals with clients who have come into large sums of money - Lotto winners, entrepreneurs, retired farmers - and says it's important to think about a spending plan from day one.

Big-ticket items on the Edgington's list are a $1 million Auckland home and a $2 million rural property. The most extravagant is a $350,000 Alfa Romeo Spider for Mrs Edgington, who eventually decided against her "dream car" of a red Ferrari.

"I wouldn't want to look like a poser in it.

"When I see a Ferrari driving along I always want to see who's in it. And it's a spectacle," she said.

She would also put aside some to kick-start her business selling Maxamec children's play and educational equipment to primary and preschools.

She and her husband say they would continue to work and their lifestyle would not change dramatically.

Money would go to family - $500,000 to each of their parents, and $4 million to the wider family.

The couple would also give around $1 million to charity - Christchurch, cancer research and the Fred Hollows Foundation are the likely recipients.

Mr Lang says the desire to give a large chunk of money to charity and then invest the rest was a typical approach, but not always the right one.

"It's much better to build in a sustainable level of giving for the remainder of the client's life, rather than giving it all at day one and spending the next 10 or 15 years not giving anything."

However, if a sum were set aside in the bank and given out in annual donations, its real value would decrease yearly because of tax on interest and inflation.

A better option was to use an inflation linked bond - which pays a level of interest and increases in value by the inflation rate.

Mr Lang would advise putting any money left after gifts and spending - at least $20 million in the Edgington's case - in three different funds.

The first "standard of living" investment fund would generate enough money every year to maintain the Edgington's desired lifestyle.

An annual amount - say $600,000 - would be agreed upon, and then software modelling would be used to make sure that could be generated for the remainder of their life expectancy.

"That helps put some disciplined framework around a family very early on ... and then they can feel totally guilt-free about spending X amount because they know it's sustainable."

The second fund addresses Mrs Edgington's desire for a $10 million nestegg to be put aside, "so that if everything went pear-shaped there would still be something left".

Mr Lang says this was a common request, but a lot of people falsely believe putting that money in a bank is the safest option.

Inflation and paying tax on interest means a fortune left in the bank diminished in real value.

"We have clients who have been relatively wealthy, and have become relatively poor over a 20-year timeframe just by holding their money in cash."

Instead, he recommends a range of investments including inflation-linked bonds, cash, gold, and exposure to at least three different currencies.

Anything left would be in a growth fund for the Edgington's retirement when they could travel "properly" for five or six months at a time.

"My old man has got it pretty good - he spends summers in England and here," Mr Edgington said. "And we would totally do that."