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The Mick
LSU Fan
Member since Oct 2010
20797 posts
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How do lottery winners or extremely wealthy keep their $ safe?


Doesnt FDIC max out at $400k per bank? So how can someone safely put their money away and not worry about losing it?






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Chris4x4gill2
Alabama Fan
North Alabama
Member since Nov 2008
1851 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


FDIC max is $100k. The amount of cash you are talking about would be invested, not deposited in savings. Investments are not insured.

To keep deposits of mroe than 100K insured, use multiple banks or accounts under multiple names (wife, business, etc)






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OnTheBrink
Alabama Fan
TN
Member since Mar 2012
3423 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


Its been several months/years now but it seems like I remember a Dateline special about lottery winners and how most of them have nothing left. So, I guess one way to keep it safe would be to blow it.





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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
76226 posts
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re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

FDIC max is $100k.
$250,000






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The Easter Bunny
Georgia Tech Fan
Minneapolis, MN
Member since Jan 2005
41493 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


So say you're a Walton with billions in net worth. Most of that is WalMart stock I'm sure, but they must have accounts to pay for expenses without continually selling shares. Just each bank in Arkansas has $400k?

What would you do, Russian?






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
28619 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

So how can someone safely put their money away and not worry about losing it?


For amounts that size there is always some risk of loss. But there are ways and it's a question most third-world rich families have dealt with reasonably well.

You stash funds in investments all over the world, for one thing. If you have a billion to spread around, you could put ten million each in the most solid bank in 100 different countries. Sure, you may lose ten million here or there but most of your money will be fine.

Also, you can invest in real estate in many different countries and rent it out when you aren't there. Or just move there, Saudi royals and Russian oligarchs do that a lot. Or buy one or two of those superyachts - they aren't just for being over-the-top, they are also reasonably safe ways to store value.






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Newbomb Turk
Navy Fan
perfectanschlagen
Member since May 2008
9961 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

quote:
FDIC max is $100k.

$250,000


Correct. And, you get it per bank. So you can put $250K in as many FDIC insured banks that you can find and it's all safe.

But, you would be pretty darn stupid to do that. NOTHING is totally safe. If all the sh!t hits the fan, you can bet your a$$ that your FDIC "guarantee" is about as good as Odumbf*ck's promise that Odumbf*ckCare would actually save the government money.

As any investment guru will tell you, the trick is to diversify.

If I won a huge lottery like the $200 million the NJ man won, I would take AT LEAST $2M and put it in gold, silver, platinum. I wouldn't look at it as an investment, or as something that I would ever consider selling. I would plan to die with it -- no matter what happens to the price. The real reason I would buy that much is just in case the world goes to sh!t. If you lose everything, in every bank and brokerage account, you can almost bet your a$$ that that $2M will be worth 10's, if not 100's, of millions.



This post was edited on 3/28 at 8:34 am


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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
76226 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

What would you do, Russian?


First of all, I'd manage most of the portfolio myself in stocks and mutual funds.

For cash requirements or for funds I would want to have no volatility of values, I'd set up accounts at several banks and max out the FDIC coverage by opening an account in my name, my wife's name and a joint account in both of our names thus providing $750,000 FDIC coverage ($250,000 X 3) at each bank.

Then I would pick a large bank and set up a revocable trust and have the bank's trust department manage a good chunk of the money in fixed income and equities. No insurance is needed for that and I would always have that in case I screw up managing my own equities portfolio.

If I had millions left over after that, I'd pick a "too big to fail" bank and set up a collateralized deposit account whereby the bank would pledge government securities against any balances I maintained with them in excess of FDIC coverage. This is what large corporations and governmental agencies routinely do to protect their deposits over the FDIC coverage. While it's not like having FDIC, I would at least be a secured creditor of the bank in the unlikely event the government let that bank fail.

ETA: I'd probably also rent a large safe deposit box and fill it up with $100 bills, although technically I think that's illegal from what I understand.




This post was edited on 3/28 at 8:41 am


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The Easter Bunny
Georgia Tech Fan
Minneapolis, MN
Member since Jan 2005
41493 posts
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re: How do lottery winners or extremely wealthy keep their $ safe?


Cool stuff. Not that I will ever have these worries, but I've been curious about it before. Thanks guys





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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
14387 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


First, it is impossible to eliminate the risk of loss. You can only minimize it.

Another technique is to analyze your realistic cash flow requirements and needs for liquidity. Establish as many insured accounts as your family will qualify for. If you come up short you can establish a line of credit with the bank to cover your requirements. The line of credit can be secured with assets held outside the bank in order to minimize the costs.






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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
54553 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


I would do pretty much everything Russian said except that I would own a bank. I would assrape people with a ridiculous spread.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8721 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

How do lottery winners or extremely wealthy keep their $ safe?



Hope I get a lot of hate for this statement:

Lottery winners are too stupid to keep their money safe. They're idiots who couldn't manage a small budget, How in the world would they manage a large one?

90% of all lottery winners burn through their winnings and are in debt in <5 Years.

Tax on the poor and people who can't do math. frick the Lottery.












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Chris4x4gill2
Alabama Fan
North Alabama
Member since Nov 2008
1851 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

quote:


FDIC max is $100k.


$250,000


Didnt know they raised it a few years back - good to know, not that it matter for me though lol






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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
54553 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


I have managed money for about 5 clients who got settlements over 1 million dollars. None of them have money left. But I love having their business for 2 years.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8721 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

I have managed money for about 5 clients who got settlements over 1 million dollars. None of them have money left.


You may want to rephrase that , did you manage it and burn through it? God I hope not.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
76226 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

I would do pretty much everything Russian said except that I would own a bank.
I do.






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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
20367 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:


I have managed money for about 5 clients who got settlements over 1 million dollars


hmm I've been looking for a financial planner.

quote:

None of them have money left


umm nevermind






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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
28619 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

I have managed money for about 5 clients who got settlements over 1 million dollars. None of them have money left. But I love having their business for 2 years.


Sounds about right. Back when I worked in that business in my early career we had two clients who each got over $10 million windfalls. Both were broke within five years and the story was pretty much the same for both.

They immediately got nice houses and "showtime" cars. Suddenly friends and second cousins showed up wanting small windfalls themselves. The local pastor, of course, wanted 10% and named a wing of the dilapidated "church" (really just a tiny boarded up building) in the donor's "honor".

In one case we actually fired the client b/c we were worried she might sue us for failing to keep her safe from her own dumbassery. Probably happened with the other one also after I left.






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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
54553 posts

re: How do lottery winners or extremely wealthy keep their $ safe?


quote:

You may want to rephrase that , did you manage it and burn through it? God I hope not.


They burned through it faster than I could make it for them. I manage the money, not their lives and shitty decision making. I tell them it's a bad idea and they still want $100,000 for the duck lease.






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8721 posts
 Online 

re: How do lottery winners or extremely wealthy keep their $ safe?


Yep, you cannot out earn stupidity. I tried to do it for years, always ended up broke.





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