(WGHP) — FOX8 will be streaming Wednesday night’s $1.2 billion Powerball drawing at 11 p.m.
If the winner chooses the lump sum, they will receive $596.7 million.
They will also have the option to choose the $1.2 billion annuity which is twice as large but is paid out over 29 years.
Winners of giant jackpots nearly always take the cash, and financial advisers say that might be a mistake.
Nicholas Bunio, a certified financial planner from Downingtown, Pennsylvania, said even with his expertise, he would take an annuity because it would so dramatically reduce his risk of making poor investment decisions.
“It allows you to make a mistake here and there,” Bunio said. “People don’t understand there is a potential for loss. They only focus on the potential for gain.”
The gulf between the cash and annuity options has become larger because inflation has prompted a rise in interest rates, which in turn results in potentially larger investment gains. With annuities, the jackpot cash is essentially invested and then paid out to winners over three decades.
Under the annuity plan, winners will receive an immediate payment and then 29 annual payments that rise by 5% each year until finally reaching the $1.2 billion total.
Lottery winners who take cash either don’t want to wait for their winnings or they figure they can invest the money and end up with more money than an annuity would offer.
As Jeremy Keil, a financial adviser from New Berlin, Wisconsin, put it, “There is no bad choice.”