In many cases, when someone wins the lottery, people tend to choose the lump sum, but the assumption is that a monthly or weekly payout would be the better option.

Let's use math to prove which is actually the better of the two options.

Over 50 years, you receive $1,000 a week, or $1,000*(50 years)*(52 weeks/year) = $2.6 million.

In the other scenario, you receive $600,000 and put it into an account. You receive $600,000*(1.0025^600) = $2.684 million. Over that time period, you receive $84,000 more than if you had taken the weekly benefit. Note: 1.0025 is 1 plus .03/12, the annual interest rate divided by months in the year.

To find the intersection, you need to set the equations equal to one another with the value of time (months) unknown, so 600000*(1.0025^x)=1000*(52/12)x. Simplify that to reveal that around 560 months, or nearly 47 years, it becomes more beneficial to take the lump sum. Prior to that, however, you are receiving more from the monthly benefit.

Now, if you are actually planning on using the lottery money, you will not be able to access it and earn the same amount of money if you are just investing it, so it is more practical to take the monthly benefit because you want to be able to use it for those first 47 years before it becomes more valuable to have invested it.

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