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Playing the Mega Millions? Here’s How to Spend Your Lotto Winnings

Lottery fever has gripped the country as the multi-state Mega Millions drawing reached $540 million, a new record.  Fantasizing about $500 million is fun regardless of whether or not you win. In the spirit of the lottery, we’ve prepared a list of things you can blow your winnings on.

Cars

A new car is one of the first things that usually comes to mind when thinking about lottery winnings. While an extravagant house might be too much to contemplate, stepping up in the automotive world is easier to imagine. The good news is that you can now afford to buy one of each of the world’s ten most expensive cars and have a little over $524 million leftover. That’s plenty of money to build an upscale garage on your own private island. Plus you can drive a different car to work every day for two weeks… assuming you still want to clock in after you become a multi-millionaire. The world’s most expensive sports car, the Bugatti Veyron Super Sports? A drop in the bucket at a mere $2.4 million.

Houses

While you might feel the urge to build your own private replica of Scarface’s palatial suite, think again. Most big lottery winners blow it all pretty quickly. Assuming that you’re able to hold on to a few million after the shock of being filthy rich passes, the property tax on such a house will kill you. Instead, you should aim for something a little more modest. Let’s say a third of your winnings, as you’re supposed to pay a third of your money toward rent or a mortgage. Guess what? The bottom seven of the ten most expensive homes in the world are within your price range. Our favorite? Hearst Mansion. William Randolph Hearst’s palatial former mansion includes amenities like night clubs, tennis courts and swimming pools. Those plurals aren’t unintentional.

Investments

If you don’t want to join the club of lottery winners who promptly blew it all, you’re going to need a diverse investment portfolio. This should include stocks, bonds, real estate, commodities, intellectual property and tangible property — things like fine art and priceless china. The rationale for this is two fold: First, you want to be able for your earnings to keep up with inflation - not to mention cover the enormous tax burden you’re assuming by having so much wealth invested in the Hearst Mansion and your collection of expensive sports cars. Second, if you just keep $540 million in cash laying around (though you should have a large amount of readily available cash), it’s far more likely that someone can rob you. One note of caution: When you win a huge lottery jackpot, you’re approached by all sorts of people who want you to invest in their business. Unless you’re a previously successful investor, it’s best to hire someone to manage your portfolio for you.

Charitable Donations

For tax write-off purposes (as well as karmic ones), you’ll want to kick a significant chunk of money towards helping make the world a better place. Make sure that you’re donating to 501(3)(c) charities to ensure that you get a deduction. Donating is the opposite of investing. You do not want a diverse portfolio. You want to pick a few areas you care about and give them a ton of money. Steer your money toward places that spent 70 percent or more on actually aiding the cause, rather than on administrative costs. Five percent of your earnings is a good price point to shoot for. Think of what $27 million will do for your pet causes.

Buy Judiciously

While the jackpot is higher than ever, your chances of winning are quite slim. Things that are more likely than winning the lottery include dating a supermodel and a Mets World Series win. If you want in on the action, don’t spend more than you can reasonably afford. Lottery tickets are for fun, not an investment strategy.

Nicholas Pell is a freelance writer based out of Hollywood, CA. He has three numbers for the big draw.