Introvert Talks - The Million Dollar Question

"Introvert Talks" is meant to be a new initiative or theme, where I myself as an introvert, just talk about reflections and thoughts about my life, or maybe share more personal stuff. :)

This is my weekly post under this "Introvert Talks" theme and let's see where it takes me and us.

---

If you won the lottery, would you take 1 million dollars or take 1000 dollars per week for an entire lifetime?

Wow it has been 18 days since my Introvert Talks post. Almost 3 weeks of inner peace? Lol!

Anyway, I came across this million dollar question (literally) on social media. The story was that one 20 year old won a lottery, and she picked the 2nd option (1000 dollars per week for an entire lifetime) and it sparked a huge debate about which was the better choice. While I am not totally sure if the story is a real one, and even if this was a hypothetical scenario, I thought the viewpoints shared within the community were quite interesting.

The Mathematical Perspective

One group praised the 20 year old for being good in math because at 1000 dollars per week, it will take approximately 20 years to hit the breakeven point of 1 million dollar. And after that, it would be excess profits. Given that the person is just 20 years old, based on the average life expectancy, it is extremely likely to live beyond 40 years old.

The Financial Perspective

Another group disagreed. While the 20 year old might be good in math, the group felt that her financial knowledge was bad. They shared that with 1 million dollars, she could easily generate a good amount of lifetime income through investments, be it real estate (buying a house and earning rental), or putting in bonds or equities. If she is able to get achieve a 5.2% return on that million dollars, that gives her 1000 dollars per week for a lifetime too. In short, that's best of both worlds.

The Human Behaviour Perspective

But sometimes, it's not always about the numbers. Some felt that since she was just 20 years old, she might not be mature or well equipped to handle huge sums of money. We always hear how lottery winners squander their winnings within a matter of years, and by picking the second choice, it will remove the risk of her overspending.

The Life Expectancy Perspective

As if the considerations weren't complicated enough, someone threw a curveball and said what if she passed on earlier (e.g. at 30). By opting for the lifetime weekly payout, this meant she would not have anything for her loved ones. If she had taken the lump sum of 1 million dollars, she could pass it down.

The Counterparty Risk Perspective

That's not all! Haha! Someone pointed out that the second option has a counterparty risk because the lottery company might not survive through her entire lifetime. And that's a valid risk to consider because we are looking at many years for her case.

My Take

These 5 perspectives were the more interesting ones. I think tax was also mentioned, but I think different countries have different tax regulations, so it's hard to compare meaningfully in this aspect.

So after all these perspectives, I also asked myself this same question. I don't know about you, but I think the counterparty risk consideration stuck out more to me, and it's "safer" to get the lump sum payout than to hope that the weekly payouts continue to last for a lifetime. Because you never know when it can be stopped.

So what would you pick? Created a Poll on Snaps so you can vote here!

With that, that's all I have for this week for my self talk post! A early Merry Christmas to all my Introvert Talks readers - since I am not sure when my next post will be! :P