Big Money Could Have Made Big Interest
Wednesday, July 30th, 2008What would you do if you won 3.6 million dollars? Would you run out and spend a bunch of it? Give some of it away? Take your time and make a decision?
If you decide to take your time, you’re on the way to a good start - still, I’m puzzled why Maple Ridge BC realtor and lottery winner Peter Dushop chose to take his 3.6 million and stuff it away in a safe deposit box for almost a full year while he pondered his options.
The thing is, excellent and safe “holding tanks” for money are available for people who want to think things through before they make a big money decision, such as investing a lottery windfall, an inheritance, or even buying a house. There are high-yield savings accounts, or money market funds which would be perfect for holding your cash until you know better what you want to do with it. By waiting nearly a year to claim his money, Dushop said “no thank you” to tens of thousands of dollars of interest. A year ago, money markets were yielding 4.5% annually, and in the last couple of quarters that return has dropped to around 3 percent. That’s not a lot when you are looking at hundreds of dollars, but when you are talking about $3.5 million, it could have made $100,000 interest or more. And that is the interest you get for “playing it safe”.
So? Doesn’t he have enough already? He might, though research shows that most lottery winners don’t hold onto their earnings, spending and losing the money until they reach their previous standard of living, usually within 5 years. If Mr. Dushop spent the year educating himself about money management, he may defy the odds. I get the feeling though, that he spent the year scared stiff to take any action because it could be “the wrong move”.
That’s a shame, because we need more people with access to money who are unafraid to use it and grow it, enriching their lives and more importantly, the lives of those around them.
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