What would you do if you won $150,000 in a lottery?

[CalgaryFan1988]

nm, I'm slow.

[Slava]

Originally Posted by Barbecue

Not sure when you said "against a single house" if you meant a built portfolio using leverage on the house or comparing a built portfolio vs putting all the money towards in the house...

in any case, when it comes to investing, i'd rather my break even point to be at 0% instead of 3% or whatever the mortgage rate is. Leveraged investments is risky and you always have to assume the risk tolerance for the OP is weak

I said against a single house because that's what it is: one house. That specific house might be awesome, or might be average, so who knows whether it's a better investment than the other houses on the street or in the city? It just happens to be the house you have a mortgage on currently, and you live there. So what I'm saying is that investment wise, and purely investment wise, we have no idea whether it's a good investment or not. And theoretically you might save three percent in interest on that $150k, but you could easily surpass that in the market.

I should note that although you don't seem to think it's possible, advisor's will give advice based on a situation and not only whether they stand to profit. I would say that if the person here was close to retirement and the decision was to pay off their 'forever' house entirely I might provide different advice. To me that's a completely different situation. I take this as a guy a couple decades or more away from retirement, paying a mortgage and maybe staying in the house, maybe not. That doesn't scream pay the mortgage down to me, because it's basically savings for the next house, if that makes sense?

[DoubleF]

Originally Posted by Locke

This is important, if the individual we're assuming is earning $120K/yr then all hes really earned is one tax-free year of salary, or a normal year and a bit.

Its awesome, but it isnt life-changing.

Yep. But I'm sure one of us should be entrepreneurial and go for Hookers and Blow.

That being said, Hookers and Blow will be a pub and the "story" will be it was a whistle on a dirty hockey play.

Private booths will be modeled after penalty boxes and signature happy hour specials will be named the "Unsportsmanlike conduct" or triple shot specials, the "hat trick". Those who don't drink can choose from the Addy menu. All bouncers will wear a name tag saying, "Brian". Beautiful team logos will be displayed prominently on ceramic discs in the back and you and friends for a small cost, you and friends can all drunkenly throw pucks to destroy the enemy team logos for an entire night. Feel free to scream, "YEAH! BABY!" if you successfully break something. What's that in your burger? I can't tell if it's a badly burned patty or a hockey puck. But no worries, sport that toothless grin like all hockey champs.

Sorry... I was bored...

[jeffporfirio]

Originally Posted by Arya Stark

Like I said, overseas high interest bank account is one place.

Being ignorant here.
Can you elaborate on such, "overseas high interest bank accounts"?
Where are these accounts located? How risky are they? What do you consider high interest?

[Dion]

Screw all the investing stuff! I want to have some fun with my winnings!

[MoneyGuy]

Originally Posted by Dion

Screw all the investing stuff! I want to have some fun with my winnings!

Nothing wrong with enjoying some of the money, but I know a guy who lost his wife and he blew his life insurance money and put nothing away for his future. A few years later the sports car he bought was gone and his retirement was still in the same jeopardy he was when she died. I'd suggest looking after your future first, and maybe playing with a bit of the money.

[Dion]

Originally Posted by MoneyGuy

Nothing wrong with enjoying some of the money, but I know a guy who lost his wife and he blew his life insurance money and put nothing away for his future. A few years later the sports car he bought was gone and his retirement was still in the same jeopardy he was when she died. I'd suggest looking after your future first, and maybe playing with a bit of the money.

What if a person has been taking care of his retirement investments all his working life and decides to spend a little on himself?

[MoneyGuy]

Originally Posted by Dion

What if a person has been taking care of his retirement investments all his working life and decides to spend a little on himself?

Hey, no problem with that. Problem is many people would see this as found money to be blown. To he11 with retirement, it's found money. Easy come, easy go. I've seen it a few times.

[Slava]

Originally Posted by jeffporfirio

Being ignorant here.
Can you elaborate on such, "overseas high interest bank accounts"?
Where are these accounts located? How risky are they? What do you consider high interest?

I have seen some accounts in SE Asia that have higher interest rates. Some are higher than here just based on the local economies and the risks associated are similar. You also have to factor in currency, and with that the gains are likely minimal. (This is an arbitrage free rate, so you have an interest rate that takes into account inflation and currency exchange as well...for anyone who cares)

[Dion]

Originally Posted by MoneyGuy

Hey, no problem with that. Problem is many people would see this as found money to be blown. To he11 with retirement, it's found money. Easy come, easy go. I've seen it a few times.

That seems to be a general problem with most lottery winners.

[indes]

Originally Posted by MoneyGuy

Hey, no problem with that. Problem is many people would see this as found money to be blown. To he11 with retirement, it's found money. Easy come, easy go. I've seen it a few times.

We can't all be fiscally responsible!!

[Regular_John]

Originally Posted by Dion

Screw all the investing stuff! I want to have some fun with my winnings!

Great shots! But you didn't mention the camera you'd buy!... oh wait, did you mean the car?

[bizaro86]

Originally Posted by Slava

I have seen some accounts in SE Asia that have higher interest rates. Some are higher than here just based on the local economies and the risks associated are similar. You also have to factor in currency, and with that the gains are likely minimal. (This is an arbitrage free rate, so you have an interest rate that takes into account inflation and currency exchange as well...for anyone who cares)

Savings accounts overseas should be arbitrage free, unless they are somewhere he arbitrage would be very difficult.

http://mongolia.deposits.org/

I met someone at an investment conference who had negotiated a bunch of 20% plus rates on Mongolian CDs. He was able to hedge out the currency rates.

[Arya Stark]

Originally Posted by jeffporfirio

Being ignorant here.
Can you elaborate on such, "overseas high interest bank accounts"?
Where are these accounts located? How risky are they? What do you consider high interest?

Pretty straight forward. Overseas.

Brazil and Pakistan are places that can offer 6% and above and I'd say pretty secure.

[Wormius]

But your money is not saved as CDN dollars in those overseas accounts. It is converted to say, pesos, which could undergo deflation with respect to CDN.

For example, if somebody invested $150,000 CDN and that was converted into 1,500,000 pesos, deposited and made 6%. So you want to cash out after a year, and you have 1,590,000 pesos.

Well, unfortunately the peso didn't do so well that year, and now instead of a peso being worth $0.10 CDN, it's now worth just $0.07 CDN. After withdrawing your money and converting back to Canadian, now you're left with $113,000 CDN. That 6% interest doesn't look so great.

That was an exagerated example, but its to illustrate the point that you can't just assume that because an overseas account is making all of that interest that you can dump your CDN money in and you'll be rich.

[bizaro86]

Originally Posted by Wormius

But your money is not saved as CDN dollars in those overseas accounts. It is converted to say, pesos, which could undergo deflation with respect to CDN.

For example, if somebody invested $150,000 CDN and that was converted into 1,500,000 pesos, deposited and made 6%. So you want to cash out after a year, and you have 1,590,000 pesos.

Well, unfortunately the peso didn't do so well that year, and now instead of a peso being worth $0.10 CDN, it's now worth just $0.07 CDN. After withdrawing your money and converting back to Canadian, now you're left with $113,000 CDN. That 6% interest doesn't look so great.

That was an exagerated example, but its to illustrate the point that you can't just assume that because an overseas account is making all of that interest that you can dump your CDN money in and you'll be rich.

In almost all cases the interest rate differential is exactly equal to the amount you can expect to lose on the currency per year. You can check currency futures to make sure.

[Domoic]

lol - false

[Slava]

Originally Posted by Domoic

lol - false

What's false? I have a feeling this is going to an argument of whether arb-free rates hold true. Thrilling conversation!

[troutman]

Originally Posted by MoneyGuy

Hey, no problem with that. Problem is many people would see this as found money to be blown. To he11 with retirement, it's found money. Easy come, easy go. I've seen it a few times.

You can't be sure you can enjoy your $ when you are older. Play hard while you can?

[Resolute 14]

Invest in bitcoins!