“Money is wasted on fools. They cannot buy wisdom when they have no sense.” – Proverbs 17:16
The winner of the record-breaking $2 billion Powerball jackpot, Edwin Castro, 31, secured the winning $2.04 billion ticket at a gas station in Altadena, near Los Angeles, in November last year.
He claimed his prize in February, opting for the $997.6 million cash option rather than the 29 years of annuity payments, per Fortune.
This meant that Castro ended up with about $628.5 million in cash after federal taxes, according to USA Today.
With his newfound wealth, Castro has bought:
$47 million mansion in Bel Air (DailyMail.com reported)
$25.5 million home in nearby Hollywood Hills, which Fortune said was one of the area’s most expensive sales to date.
$4 million for a house in Altadena, his hometown.
A vintage Porsche
After his property investments, which total about $76 million, Castro still retains a substantial portion of his winnings.
At this point you may be saying ‘why is he considered a fool? He’s livin’ the life!’ Let’s look at the Foolish 5.
Fool move:
1. Cat’s out the bag – any substantial winning should be protected from public scrutiny. Seeking the advice of a skilled attorney that can set up various entities to conceal your identity should be tops on the list.
2. Your rich Uncle – The richest uncle for any of us is Uncle Sam and he doesn’t need to get another undeserved cent to fatten his coffers. Giving up ~$1billion in income by opting out of the annuity is bad enough but why give another $350million+ up front? With good advice Uncle Sam gets as little as he deserves, you and who you deem worthy gets the rest.
3. Impulse purchases – making a sudden and significant change to your lifestyle is a recipe for disaster as it demonstrates lack of discipline and wisdom. As such, it won’t be long before that itch comes back and the uncontrolled desire to scratch it with yet another large impulsive purchase.
4. Counting the cost – The top end of the real estate purchases may total $3 million annually – just to hold on to the property! How much then does it cost to remodel, furnish, entertain, repair, etc., etc., etc.? A $3million annual cost can easily exceed $20million annually or more.
5. Creditors and predators – No mention was made of having a Financial Advisor to protect against these ravenous vultures. Beyond the protection is the planning and management to achieve your goals looonng into the future.
Want to avoid the foolish 5? Talk to your advisor BEFORE you make your money moves.
