What woud you choose?

Discussion in 'Community Discussion' started by Kronie, Jul 29, 2009.

  1. Kronie macrumors 6502a

    Kronie

    Joined:
    Dec 4, 2008
    #1
    If you had to choose between:

    $190,000 in cash.

    OR

    $1,120 a month, for the next 20 years. (269,000)

    What would you choose?
     
  2. MacMini2009 macrumors 68000

    MacMini2009

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  3. SilentPanda Moderator emeritus

    SilentPanda

    Joined:
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    Location:
    The Bamboo Forest
    #3
    I'd take the $190,000 and put it in an investment that would yield more than $269,000 at the end of 20 years... probably.

    My local bank has a 25 month CD at 3%... and I'm sure you could even find better than that if you looked.

    25 months later I'd be at $202,238
    then 215, 264

    (and lazy math at ~ $13,000 every 2 years...)
    228,000
    241,000
    254,000
    267,000
    280,000 - 14 years...

    After 20 years you'd be at $345,943

    Those seem like kinda odd numbers though... are you faced with this decision?
     
  4. GoCubsGo macrumors Nehalem

    GoCubsGo

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  5. robanga macrumors 68000

    robanga

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    Oregon
  6. Dagless macrumors Core

    Dagless

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    Jan 18, 2005
    Location:
    Fighting to stay in the EU
    #6
    Monthly payment. I don't want to be handed a lot of money but I'd like to be trickled it over time, or else I'd spend it stupidly :eek:.
     
  7. LizKat macrumors 68040

    LizKat

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    Location:
    Catskill Mountains
    #7
    What if I tripped over the cat and broke my neck on the way into the house after cashing the first $1120 check. That would be so like me.

    Nope. $190k to invest. Much mo' betta idea for this klutz.
     
  8. kymac macrumors 6502a

    kymac

    Joined:
    Nov 4, 2006
    Location:
    portland
    #8
    am i choosing to receive this much or pay this much?
     
  9. MacMini2009 macrumors 68000

    MacMini2009

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    May 22, 2009
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    California
    #9
    I think receive.
     
  10. Decrepit macrumors 65816

    Decrepit

    Joined:
    Sep 6, 2007
    Location:
    Foothills to the Rocky Mountains
    #10
    It's been said already, but it bears repeating.

    Take the money now.

    With that kind of cash, you can invest $165K and use $25K to buy a new reliable car in cash.

    No debt. Which means no investments actually losing money because you're sending money on interest payments to somebody else.

    You wouldn't believe the number of people with a few grand on a credit card at 12% who think that their 3% yield on their savings account is a better place for their money.

    The 1120/mo is "guaranteed" until it's not. What is your recourse if payments cease? Who takes over the stream of payments if you become ill? What happens if the fund/bond that covered your 1120/month is improperly handled by the original investor?

    No. Take that money and run.
     
  11. OutThere macrumors 603

    OutThere

    Joined:
    Dec 19, 2002
    Location:
    NYC
    #11
    Lump sum...invested skillfully you could be sitting on $1m in 20 years.
     
  12. Gregg2 macrumors 603

    Joined:
    May 22, 2008
    Location:
    Milwaukee, WI
    #12
    Not quite. Governments (state and federal) get a piece of it first. Hire an accountant to do the real math. Of course, he/she also has to analyze the tax implications of the monthly payout, which is more difficult since you would have to predict your future income from other sources.
     
  13. Unspoken Demise macrumors 68040

    Unspoken Demise

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    Location:
    >9,000
    #13
    190K cash.
    Then maybe I could actually go to the college of my dreams. :(
    Or you know, any college. :eek:
     
  14. SilentPanda Moderator emeritus

    SilentPanda

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    Location:
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    #14
    Well yes but regardless you'd end up with more if invested properly.
     
  15. steve2112 macrumors 68040

    steve2112

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    East of Lyra, Northwest of Pegasus
    #15
    Yeah, over 20 years, inflation will greatly de-value that $1120/month. With proper investing, you can easily beat inflation plus a lot more.
     
  16. shaunymac macrumors 6502

    Joined:
    Feb 5, 2008
    #16
    You are almost always better off taking the lump sum. Pay all the taxes up front and invest.

    I say almost always because of this. Some people are not very diligent, budget -minded, or whatever you would like to call it. If you are this way and you think you would blow throw a lump sum quicker than the payment plan, by all means, take the payment plan.

    If I ever win the lotto, lump sum, invest, live cheap, and live happy. Oh, and live off interest. :) I already do some of that right now. Live cheap and happy. :) I would just have a higher standard of living. haha.
     
  17. ucfgrad93 macrumors P6

    ucfgrad93

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    Location:
    Colorado
    #17
    I'd take the lump sum of $190,000. I would invest it and make more than $269,000 in 20 years.
     
  18. rasmasyean macrumors 6502a

    Joined:
    Jul 11, 2008
    #18
    It might not be that simple.

    If this is a "winning" like a lottery, you will have to pay a hefty tax on the lump sum. However, the distributed method would depend on how much other income you get during the 20 years.
     
  19. paddy macrumors 6502a

    paddy

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    Jun 25, 2005
    Location:
    TN
    #19
    You pay tax on lottery wins?
     
  20. Unspoken Demise macrumors 68040

    Unspoken Demise

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    >9,000
    #20
    Yup. Welcome to America. *salutes*
     
  21. paddy macrumors 6502a

    paddy

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    Jun 25, 2005
    Location:
    TN
    #21
    They tax the sh*t out of us here in Europe but lottery wins I understand not; you can't tax a loss so why tax the win?
     
  22. rasmasyean macrumors 6502a

    Joined:
    Jul 11, 2008
    #22
    Well, in the US you "deduct" a loss.

    That means that it will offset your other income. But there are sometimes details.

    Earn $50,000, gamble away $50,000, you own no taxes is the ideal. But they throw in special cluases like certain losses can offset only specific type of gains.
     
  23. Gregg2 macrumors 603

    Joined:
    May 22, 2008
    Location:
    Milwaukee, WI
    #23
    Well, maybe. Under "normal" circumstances, yes. Remember, "past results are no guarantee of future performance" - as They say.
     
  24. InvalidUserID macrumors 6502a

    InvalidUserID

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    Palo Alto, CA
  25. killerrobot macrumors 68020

    killerrobot

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