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CNN LIVE TODAY
Aired December 30, 2003 - 11:20 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: It could turn out to be a filthy rich New Year for one or more lucky Lottery players. The Powerball drawing on New Year's Eve, it's worth 210 million bucks. And tonight's Megamillion numbers not exactly chump change, at $155 million. That multistate game played in 11 states.
So, let's say you win one of those big lotteries, what happens after you fill your bank account? Most experts say you should find a financial planner like, oh, say, our guest Michael Boone.
He joins us to talk about holding on to your newfound riches and your sanity. Welcome.
MICHAEL BOONE, FINANCIAL PLANNER: Hi, Carol.
COSTELLO: So nice to fantasize.
Have you helped me new multimillionaires lately?
BOONE: You know, we have. It's an exciting to be part of a lottery winning, big change of life for people. It's really lot of joy to be part of it.
COSTELLO: A lot of joy. I think that's an understatement. So do you take your winnings in a lump sum?
BOONE: That's one of the first things that we calculate for people, help them determine whether to take a lump sum. In general, it's the best thing for people. They can control the capital and basically do exactly what the state will do for you, set up payments, but that way you control the money.
COSTELLO: You don't want the government touching your money.
BOONE: No, that's absolutely true.
COSTELLO: So after you take that hunch chunk of change, what do you do then?
BOONE: Well, we kind of have a checklist for people. One of the really important things for people to understand is it's a major change of life. An people, when they first find out, the first thing that they do is literally become religious. They start saying oh my God, oh my God, they'll call friends and relatives. And what we find out a little bit later on, and I think Jack Whitaker (ph) is a good example, with his win from last year, people become a lot more sensitive about privacy, when you realize how much attention you've drawn and how many people want a piece of your money.
COSTELLO: You sound like you've heard horror stories from cash windfall winners, who blow through their money in a couple years. How can that be?
BOONE: You know, it's really easy to look at someone else and see a pile of money and say, oh my gosh, how could I possibly spend that in two life times? But it just absolutely goes.
The first thing, if you remember the Powerball winner last year, He won $315 million. That's the number that made the news. But the number that didn't make the news was that he actually only got a lump sum of about $113 million.
COSTELLO: That still sounds like quite a bit of money to me.
BOONE: No, you're absolutely right. Most lottery winners are not that fortunate. In fact, that's really extraordinary, but by the time taxes shrink it. and then you go out and have a little bit of fun with it and people start asking you for money. You've got second cousins that you haven't heard of for years that, you know, are in dire financial straits. You go out to dinner with all your friends, and when the check comes, everybody looks to you. Life becomes pretty expensive.
COSTELLO: Well, and you feel compelled to pay, because if you didn't, they would just look upon you as like you were greedy.
BOONE: No, you're exactly right, Carol, You think about it, the people that you know from your childhood, it would be like you sold out if you didn't help them when you made some money.
COSTELLO: So if you're going to invest this large chunk of money, what do you do? Do you put it in what's really safe and just keep it there forever and ever?
BOONE: You know, that really defends on the situation, but in general, no. You've got plenty of money that you can afford to take a little bit of risk with it. And the first thing you need to understand is you are way over the insurance limit of any bank that you can work with in terms of federal insurance. And so we recommend, and for our clients, we'll split the money into a number of institutions. We'll buy U.S. treasury bills to start off with. And I guess any time there's a big, exciting change in life, don't make a permanent decision in the throes of excitement and euphoria.
COSTELLO: So, if we win the office pool, we'll follow your advice.
BOONE: Absolutely. I'd appreciate that.
COSTELLO: Good luck to you, Michael Boone.
BOONE: Did you buy a ticket?
BOONE: You know, no, actually, I didn't. COSTELLO: Why not?
BOONE: Well, I am content to help others with it, although I think I'll run out today now.
COSTELLO: You'd rather get that percentage. It's safer.
BOONE: There you go, I'm good at that part.
COSTELLO: Thanks a lot, Michael. We appreciate it.
BOONE: Thank you. Appreciate it.
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