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Results: Which would you take?

£550 a week

32.91% • 26 votes

£550,000 lump sum

67.09% • 53 votes

You may not vote on this poll

79 votes in total.

  • FIRST POST
    • trevman
    • By trevman 5th Apr 18, 2:12 PM
    • 20Posts
    • 6Thanks
    trevman
    £550 a week or £550,000 lump sum
    • #1
    • 5th Apr 18, 2:12 PM
    £550 a week or £550,000 lump sum 5th Apr 18 at 2:12 PM
    For those of you that like do to some financial math;

    The winner was offered the choice of a C$1m (£550,000) lump sum or C$1,000 (£550) a week for the rest of her life.

    https://www.independent.co.uk/news/world/americas/woman-lottery-win-first-ticket-18th-birthday-teenager-canada-charlie-lagarde-quebec-a8277391.html

    An interesting problem to have. It would take 20 years of weekly payments to accumulate the lump sum, but then 5% a year return would get you the same amount at 550 a week.
Page 2
    • zagubov
    • By zagubov 7th Apr 18, 11:48 PM
    • 15,238 Posts
    • 130,250 Thanks
    zagubov
    My first salary after graduation was a bit over £4k per year.
    Almost 40 years later I'd need at least 10x that amount to keep my head above water. I'm hoping that the high inflation rate of the earlier decades won't return, and that we keep the lower rates we have now, but who knows?

    Does Canada have the long-fixed-rate mortgages the US is more used to rather than the short fixes we have in Europe?

    Is her income a marital asset a spouse could demand a split of? Are Canadian divorce rates similar to US ones? If she dies early, God forbid, do her dependants face financial misery as well?

    I don't think she's mad to take the income rather than the lump sum. She can study, take a job she likes, Buy a house with a short mortgage. She's showing a substantial amount of wisdom in rationing the money out. She might also have enough self-awareness what a sudden windfall can do to an inexperienced teenager.

    Unearned money's a bit like acid chemicals. I'd like a steady supply of vinegar on my chips, but I don't want to fall into an acid bath!
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
    • gardner1
    • By gardner1 8th Apr 18, 12:28 AM
    • 2,431 Posts
    • 3,635 Thanks
    gardner1
    If i was 20/30/40 or 50 yrs old would make no difference.....take the lump sum
    • george4064
    • By george4064 8th Apr 18, 3:36 PM
    • 916 Posts
    • 1,005 Thanks
    george4064
    I'm 26 years old, and whilst I appreciate taking the £550,000 lump sum would be fun I would opt for the £550 weekly payment.

    If I were older I would be more inclined to take the lump sum for various reasons..
    Last edited by george4064; 08-04-2018 at 5:16 PM.
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    • Alistair31
    • By Alistair31 8th Apr 18, 6:21 PM
    • 28 Posts
    • 20 Thanks
    Alistair31
    28 and would take the lump sum.
    • Zorillo
    • By Zorillo 8th Apr 18, 6:21 PM
    • 83 Posts
    • 50 Thanks
    Zorillo
    At 18 I'd take the income, at 35 I'm not sure. The way I feel about my current job I'd almost certainly take the lump sum and pay off the mortgage, invest the rest and take a job doing something more fun for bills and holidays. If I had a job I actually enjoyed, I'd probably take the income and invest it.
    • worried jim
    • By worried jim 8th Apr 18, 6:30 PM
    • 9,069 Posts
    • 13,974 Thanks
    worried jim
    Easy choice. Lump sum and invest. By the time she is 40 compounding will have done its job and she can retire. Can't do that taking the weekly amount.
    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • djhworld
    • By djhworld 9th Apr 18, 6:20 PM
    • 215 Posts
    • 81 Thanks
    djhworld
    Lump Sum

    The company/lotto provider/whoever it is giving the prize could just go bust in 2 years time and you'd have lost a huge amount of potential earnings, addtionally as other commenters have said, if you die next week then your next of kin won't see any of it!

    Really doesn't matter if you're 20/30/40/50/60, take the lump sum, it's the only sensible decision.

    Can I afford to buy? Mortgage Affordability Calculator

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    • singhini
    • By singhini 10th Apr 18, 12:03 AM
    • 331 Posts
    • 197 Thanks
    singhini
    I think she did the right thing taking $1,000 a week. if shes anything like me, she would be dead from excessive behaviour with $1m in the back pocket.



    I don't like this converting the Canadian $ to GBP (she's not in the UK so don't convert it, its pointless). Why don't you convert it from $ to Rupees and now say "well she's got Ru51,000 a week for life yippy as 6 samosas only cost Ru20).

    All she has to do now is find a reasonable house and get a mortgage (when they ask her how do you intend to pay back $500,000 she can answer with GAURANTEED $52,000 a year guvnor). House will be paid off in 9-10 years (Beautiful). All the banks will be queuing up to sell her a mortgage no problem.


    lets say she only lives to 60, she would get $2m (no need to worry about inflation, you have just been gifted $1,000 a week for life, who give a flying fruit bat about inflation)............come on people, start to enjoy yourself and be happy (that's the problem, you'll looking at this as people who have mortgages and don't have an extra $52,000 a year miraculously appear for the rest of your life).


    if she takes the money as a lump sum and then dies, the estate not the beneficiary has to pay the tax as there's no inheritance tax but the government treats the dead persons estate as a sale which is taxable in Canada.


    Anyway, I'm off to buy loads of tickets (i.e. 2), for this Fridays Euro lottery (13 chances to be made a millionaire this Friday the 13th).


    most important thing is she's rich enough to become a vegan and improve the life of innocent animals just the way her life has been improved financially.
    Last edited by singhini; 10-04-2018 at 12:13 AM.
    • eskbanker
    • By eskbanker 10th Apr 18, 10:14 AM
    • 6,796 Posts
    • 7,047 Thanks
    eskbanker
    I don't like this converting the Canadian $ to GBP (she's not in the UK so don't convert it, its pointless). Why don't you convert it from $ to Rupees and now say "well she's got Ru51,000 a week for life yippy as 6 samosas only cost Ru20).
    Originally posted by singhini
    That's a rather odd way of looking at things - the original subject of the story may not be in the UK but the newspaper publishing the story is and the title question is being posed on a UK website, it hardly seems unreasonable to express the values in sterling so as to make them meaningful to the forum readers without everyone having to look up CAD/GBP exchange rates....
    • TheShape
    • By TheShape 10th Apr 18, 12:23 PM
    • 1,266 Posts
    • 1,073 Thanks
    TheShape
    Lump Sum

    The company/lotto provider/whoever it is giving the prize could just go bust in 2 years time and you'd have lost a huge amount of potential earnings, addtionally as other commenters have said, if you die next week then your next of kin won't see any of it!

    Really doesn't matter if you're 20/30/40/50/60, take the lump sum, it's the only sensible decision.
    Originally posted by djhworld
    Surely these prizes are protected by some sort of insurance to guard against that?
    • trevman
    • By trevman 10th Apr 18, 12:33 PM
    • 20 Posts
    • 6 Thanks
    trevman
    for anyone interested, this story (and the maths) are briefly touched by http://theirrelevantinvestor.com/2018/04/04/the-limits-to-data/
    • grey gym sock
    • By grey gym sock 11th Apr 18, 1:11 AM
    • 4,270 Posts
    • 3,787 Thanks
    grey gym sock
    Surely these prizes are protected by some sort of insurance to guard against that?
    Originally posted by TheShape
    that could be a dangerous assumption.

    i think djhworld raises a very valid point. unless there's some very credible insurance in place, or a canadian government guarantee, or the like, then there a serious credit risk in taking the monthly income. when you're looking decades into the future, no individual company is immune from a risk of going bust.
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