What would you do if, at the age of 19, you won $1 million on a scratch off lottery ticket?
Probably a lot. A vacation here, a donation there, maybe a gift to your closest relatives, and save the rest for the future, right?
That’s the situation Louis Jay found himself in two years ago when the Towson University student won it big.
Like most lottery winners, he took a bit for himself, gave away some to charity, and pocketed a ton. But despite the fact that most lottery winners go bankrupt within a few years of winning, Jay isn’t actually doing all that bad:
Jay hired a financial team to handle his money so he can focus on finishing school. His adviser, Dr. Doug Sanford, guided Jay as he changed his major from computer science to business — a decision spurred in part by his lotto winnings.
“I give Louis a lot of credit for keeping grounded,” Sanford said.
He said he hasn’t seen any changes in the 21-year-old’s demeanor, goals or attitude as the money has fluctuated.”
I haven’t seen any change in him. I don’t think he’s a person who views himself as being founded in money. He’s founded in his efforts and ability, and those do not go away if the market tanks,” Sanford said.
Even though he’s seemingly used the money wisely, his choice to invest a lot of the money has shrunk his nest egg, along with everyone else in the market.
The after donations/gifts/car lump sum of about $500,000 has turned in to $330,000, which certainly sounds like a big drop, but given the stock market’s fall, is probably not as bad as it seems.
(Please ignore the Captain Obvious headline of the linked story: “Lotto Winner Lost Money After Investing Funds.” It could easily say “Housewife Lost Money After Investing Funds” or “Captain Sully Sullenberger Lost Money After Investing Funds,” but “Lotto Winner” makes it sound like the kid is totally irresponsible, when in fact he doesn’t seem to be that at all.)
So, what’s the lesson here? Be smart, don’t go overboard, and save for the future.
About the author: Jason is the author of Automatic Finances: 17 Days to Your Financial Freedom, a guide to automated money management. He started investing thanks to a free lunch, and after finding out how he was getting the short end of the stick, he sought out how to do it right. More »