If you had come into a million dollars

Anonus

And could accept it all at once or in twenty annual payments of $50,000, which would you take?

I'd take the annual payments.

Lunate

Short of things like the possibility of losing it or the win-the-lottery-then-go-bankrupt,due to inflation, opportunity cost, etc., the answer is getting it all at once.

Aliroz

I'd go for the annual payments.  That way, I have something to look forward to, and if I end up losing all my money or getting robbed, I still have the money to look forward to that I haven't gotten yet.

Princess Alice

🎵 I'd buy you a green dress (but not a real green dress, that's cruel) 🎵

But for real, I'd take the annual payments. It would give me some much-needed financial stability.

Yarrun XIX

Annual payments. Lottery winners generally don't deal well with instant wealth. Also, much easier to budget.

Calica

I'd take the instant and then put all but about $50000 of it into some form of investment

Viani

All at once. I have a financial plan set up (because I paid attention in that one class about finances), and interest/dividends cash out more with the amount of raw money you put up. 

The alpha you gain from investing all of it in one month would generally do better than slowly investing more and more as time passes by.

Being able to live off of interest alone basically means you win.

Calica

it's surprisingly hard to live off the interest for a million dollars iirc, but it sure would provide a cushion.

also why is financial rate of return called alpha

glennmagusharvey

also wouldn't you pay more in windfall taxes if you took the lump sum than if you took the monthly payments?

Fossilmaiden

glennmagusharvey said:

also wouldn't you pay more in windfall taxes if you took the lump sum than if you took the monthly payments?

No, because lottery winnings are taxed as income, not windfall taxes. (Also windfall taxes haven't been in effect in the US since 1988. Also also you're not a company.)

glennmagusharvey

okay, wouldn't you pay more (relative to the total amount of winnings) in income taxes if you took the lump sum, because you're in a higher tax bracket?