A Lottery Winner Makes Good
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CNNMoney has an example of the rare lottery winner that knows how to handle his sudden fortune. So many people that get so incredibly lucky have no idea how to make their millions last and have so much stolen right from under their noses that a lot of them end up in bankruptcy.
Brad Duke, 34, from Idaho won a $220 million Powerball jackpot in 2005. He took the lump sum, which amounted to $85 million (post-tax). He managed five franchises of Gold’s Gym in Idaho, so he knew a little something about managing a business and sticking to a budget. He decided he wanted to be a billionaire.
He hired a professional financial type to invest his money. He invested $45 in municipal bonds for safety and $35 million in aggressive instruments like oil and gas wells. He says he’s worth $125 million today and after a year and a half looks to be a billionaire in 12 years.
The only small problem with that projection is that it assumes that the markets continue to rock for the next decade and that oil and natural gas don’t have any price decreases. Projecting out a decade and a half is tough enough, but especially when you don’t factor in the business cycle or the gyrations in commodity markets.
He seems to have the smarts to make it to a billion, but I hope he just doesn’t get too aggressive when the markets turn south. Everyone looks like a genius when the markets are doing well, the true genii are shown when the markets are not.
He’s done very smart things like paying off his debts, not buying a huge house, and even buying a used car. He’s also set up college funds for everyone in his family and started a family foundation with $1.2 million of the earnings. He’s giving the maximum under the Gift Tax rules every year so his family can pay down their debts as well.
He seems like a nice guy with his head on straight. I just hope he doesn’t end up like this.