Win lottery

Your flaw is that you didn;t factor in BLR in your country and the rate of which fiat currency (Americuck dollars) is inflating each year.

>BLR
Isn't 5% fine for a big loan like this?
Mine is just a hypothetical question, so let's say an average European country or US state.

>and the rate of which fiat currency (Americuck dollars) is inflating each year
That's true, but I wouldn't throw away the 28.5m. I'd invest it and hopefully make money with it, so the inflation thing is pointless.
It's also doubly pointless considering that the loan would have a flat interest rate, so I'd still get the same installment from the lottery, and I'd still have to pay the same amount to the bank, regardless of what that money is worth.
The only thing that inflation affects is the value of my new 28.5m sitting in my account.

Also, you will left with another 15m+ (assuming interests) after the lottery money have drained.

What?
Please explain.

>take a 30 year loan for 30 millions
And what bank will give you that loan with that low interest, average credit score and having no assets to back that 30 million during that time, genius?

>$15 millions lump sum or $1 million per year for 30 years

I didn't read this right the first time so disregard my previous reply. I'd say no for taking another loan for this. Why? because you only pay the bank for 30 years (long tenure) where if you only take the yearly income of 1m, you can do so much better to grow your money within ONE year easy mode instead of taking more millions in lump sum (loan), which I doubt you will keep it safe in a year. There are a lot of risks involved when taking out loan let alone have to wait another 30 years for it to settle.

The 15 million is better option.

Put 1 million in the bank.
14 million in the SnP average. Enjoy your 1.2M return per year.

>with that low interest
Large multi-decade loans have lower interest rates because they still make a ton of money.

>no assets to back that 30 million
Except the fresh new 1m I'd get every year for 30 years, which would pay the loan back 100% safely.
Not to mention the 30m they give me, which would be well enough to pay for any difference in case I decide to stop the automatic payments for some unknown reason

>average credit score
Not a problem considering I'd have the untouchable 1m a year.

What would the risks of taking a big loan be?
I'd have an automatic repayment system so that the bank always gets its money on time, and I could just invest the 28.5 safely (and even if I lose them all, the bank would still get the payments from the lottery installments and I wouldn't be in debt).

What if I did my scheme to get the 30m lump sum through the loan, and then put the 28.5m in the SnP average?
I'd get more than double what I'd get with your system.

30 year 30M loan will cost you around 60M over the 30 years. You’ll need to do a lot better than 1.5/year.

>30 year 30M loan will cost you around 60M over the 30 years
Why?
Please elaborate.

Interest + principle

I see...

It's still a better idea, because if I take the 30m loan and put it into a safe investment and let it compound, I'd have much more than that at the end of the 30 years

Maybe, maybe not. Typically lump sums are better but the only truly safe investments are bonds and that means not having access to the money and a very low return. Everything else is a gamble. That being said, considering inflation it’s most likely the lump sum and the ability to build off of it will work out better. You would be best advised to get a financial advisor who can help you manage your money. If it were me I’d probably buy some real estate, buy a few profitable businesses, and dump $5MM into the market. Maybe leave $1-2MM in the bank for “oh shit I really fucked up” money to get you through an economic downturn.

Oh never mind I didn’t realize you’re still talking about a loan. No, that’s retarded no matter what. You will need to pay $1.5MM/year profit which your investments might not actually make and in the meantime where are you getting that money from? Your job at McDonald’s can pay the loan plus give you food and shelter? And you’re going to live for 30 years without touching that money? Lol

I miscalculated how much interest I'd have to pay for the loan (thought it would just be 1.5m lol), so with the new information that I'd have to pay it back twice, I'd have to make the loan longer to adjust for the monthly payments, so that I'd only have to pay them 1m a year, which would come from the 1m yearly lottery installment.

That's what you're ignoring. The initial lottery money.
They'd account for half of the loan, while the remaining half would be paid from the money earned by investing the 30m I'd get from the bank.

at 5% yearly compounded interest, in 15 years that 30m will be more than 60m, so the loan repayment isn't a problem (of course I wouldn't pay it off immediately or I'd lose the capital to keep compounding on).
After that it's all profit.

>And you’re going to live for 30 years without touching that money?
The compounding interest doesn't have to be a 30-year deal.
It can be from diversified sources.
At 30m I could take a small part of the capital for my living expenses and it would still be enough to live comfortably.

>A bank that knows I'm gonna have a secure 1m a year coming for 30 years.
How does the bank know that you, a complete stranger, will not spend all his money on useless things like gambling & expensive autos?

Because it can be set up so it's automatic.

Also, that's a problem with all loans, isn't it?
>how does the bank know that you, a complete stranger, won't burn the house down?
>how does the bank know that you, a complete stranger, won't total the car in two days and declare bankruptcy?

Plus, there's the 30mil they give me, that functions as collateral.

>Find a flaw.
Whats that user? You won $30 million on the lottery?! Congratulations!! Now give me 40% or I'll put you in jail!! ... Oh and don't forget to pay your state taxes too!!

Attached: download.png (385x131, 10K)

>choose yearly one
>get killed in a suspicious road accident 11 months later

Second line:
>(both choices are after taxes)

>believing the gubment

Attached: 54654654.gif (650x316, 3.85M)

what are you talking about?
I just removed taxes as a variable so we only consider that AFTER the taxes are taken, I get the 15m lump or 30m yearly

>what is the time value of money
ALWAYS choose the lump sum

>what is reading comprehension?

So no flaws then?
Good to know.
Now I just need to win 30m post taxes and I'm good.

If you actually properly factor in interest, you are left with about 15 million instead of 28.5. That’s the exact reason why you can get only 15m as lump sum in the first place..,

I don't think you realise that no bank on Earth will give you a $30mil personal loan

Yeah, I realized later, but it's still a good choice considering this:
Why not?
It's safe easy money for them.
It's like I got a government contract for 30 years where 1 million a year gets straight into my pocket.
That's a guarantee for an untouchable 30m, one million at a time.
I'll use the lottery yearly million to pay half, and the 30m to generate at least 1m a year to pay the other half.
I'm sure there's at least a bank willing to do this.
They basically double the 30m with little to no risk.

It doesn't even have to be a personal loan.
I can make the loan be for a company that I'd use for the investments.

It's like you guys have never heard of the discounted cash flow model of valuation. You have to discount the each one million dollar payment by the rate of inflation for the number of years it is in the future. Because $1 million payment in year 30 isn't work $1million in today's money. Your loan will only be around $15 million just like the lump sum. How do you think they calculate the lump sum? They use the discounted cash flow model you stupid brainlets

$30 million delivered over 30 years is not worth $30 million in today's money. This is why you are all poor

But the 1m I get is fixed, and obviously I'll get a fixed-rate loan, so I'm going to pay it off at the same rate regardless of inflation.

I don't thing you're understanding this at all.

You are securing your loan with future payments. Each future payment is actually worth less than $1 million because of inflation. Just go look up the discounted cash flow model because you are seriously retarded

But each payment I'll have to make on the loan will also stay 1m.
Why would they have a problem?
They'll always ask for a million a year, and I'll always get a million a year.

30,000,000/(1+0.0225)^30 = 15389402.3528 Rate of inflation is about 2.25% in your example. It's only worth $15 million sorry

I understand that it's gonna be worth less in the future.
The point is that the payments that I'll have to make will ALSO be worth less.

They're gonna require me to pay a million a year for 30 years. Period. Regardless of what it's worth compared to now.
The lottery installments are gonna give me exactly that.
A million per year to pay the million per year they want me to pay. Regardless of what it's worth compared to now.

We're talking about a fixed rate loan here.

If anything my system lets me have the 30m immediately so I don't have to worry about inflation, because it's paid automatically in the background when my lottery installments go to pay back the loan.

You take the lump sum and invest it all in sp500 get average return of 7% a year. 7%-2.25% = 4.75% 15000000*(1+0.0475)^30 = 60354854.6275. You now have $60,000,000 in the future

With my system I start with double that and make exponentially more money.

You always take lump sum because you can grow it faster than the rate of inflation (2.25%). You also will never get a bank to loan more than $15 million on this cash flow.

The problem is bankers have been to college and taken basic finance courses so they know it's only worth $15 million. They won't give you $30 million that is secured with only $15 million in cash flow

>You always take lump sum because you can grow it faster than the rate of inflation (2.25%)
If I take the installments I can use my system to turn them into the lump sum, excpet double the amount.
I don't think you're understanding what the plan is.

>You also will never get a bank to loan more than $15 million on this cash flow
Why not?
It's much more safe for them than any other lona, because I'd have the annual payments to give me enough money to pay it off completely (I could make a contract that says that the lottery winnings will always automatically go to them), AND the 30m to generate the additional capital for the interests.

Ok, let's pretend I'm not securing it with the 1m a year lottery winnings, but instead with a huge piece of land that's worth 30m.
I'm still gonna pay it off in 30 years time and the later payments down the years will still be worth much less.
For them it's the same amount of money regardless of where it comes from or what it's secured with.
Also, you're forgetting the 30m that I'd receive as a loan.
I could establish a company that holds that capital, and use part of that as collateral too.
Just like you use the house you bought with the loan to secure the loan itself, I can use BOTH the lottery payments AND the money I have from the loan.

Because it's not $30 million and never was $30 million. The lottery lies to dumb people. A future cash flow of $1 million every year for 30 years is not worth $30 million. It never will be and only idiots think you just take 30*1million = $30 million. That's not how this works because of inflation. I already showed you the calculation. Your "30 million dollar" lottery was always a $15 million lottery and was never ever 30 million. You just don't realized you are being lied to because you don't understand finance

You keep repeating this, and I keep telling you that it's irrelevant because the payments on any 30 year loan will also be equally devalued by inflation, so the source of income will be worth the same as what I'll have to pay for the loan.

Actually, since you're so fixated on this detail, forget it.
I'll just secure it with the company I'll make with the 30m they loan me.
What now?

I'll secure it with the company that I'll make with the 30m they loan me, and the lottery winnings won't be used as collateral, but ONLY to show them that no matter what, I'll have a way to pay the installments.
Just a bonus to make them accept. Not as collateral.

Okay fine pay be $25,000 and I will give you $1000 every year for 30 years. You think you are gaining $30,000 but I know it's only worth $15,000 so I'm actually making $10,000 because you are stupid.

What are you talking about?
That's just how loans work.
I'm willing to pay them double the 30m they give me over time, because those 30m will turn into much more than 30m.
They make money through interests on the loan, and I make money by making the 30m work.

You can't convince a bank to give you money to invest in sp500 even though on paper it seems like you could just ask for a billion dollars and earn the difference between the interest on the loan and the return you get in the market. They simply won't give you the money. They want the loan to be secured so that they essentially take on no risk. That's why they will only give you $15 million because that's what the lottery is actually worth.

Max they will loan you is 15m. You’re giving the claim on the lottery winnings as collateral. That claim is worth 15m. If you default on your loan, max they can recoup is 15m.

They normally wouldn't, but here's where the lottery winnings come into play, being set up so they always receive their payments as they should, and are always happy, because there's BOTH the lottery ensuring they always get their payments, AND the money I'd generate from my investments.

I'm giving both my portfolio AND my lottery winning as collateral.

With a 5% interest rate on a 28.5 million dollar loan, you will pay way more than 1.5 million in interest over 30 years.

I know, I realized later.
Still worth it.
See

Banks don't accept bartcoins as collateral.

I mean the portfolio I'd build with the 30m they give me.
Like, I take the loan to get a real estate developement company started, and that's what's used as collateral.