Financial experts claim $2 billion Powerball winner has made 'terrible' purchases with his winnings
Financial experts have revealed their views on how a $2 billion Powerball winner is spending his cash.
Financial experts have revealed their views on how a $2 billion Powerball winner is spending his cash.
Apparently, there's a right and wrong way to splash your lottery winnings - if you're ever lucky enough to win that is.
Edwin Castro became an overnight billionaire when he won the $2.04 billion Powerball lottery in 2022.
However, according to experts, the 31-year-old from California hasn't gone about splashing the cash in the most advisable way. Catch the moment Castro's name was revealed here:
Advert
Castro won the lottery in November but only came forward in February, and despite declining the invitation to be present when his name was revealed to the public in a bid to retain some privacy, the 31-year-old has since gone on to pretty openly flash his winnings.
He also decided to take home a lump sum of $997.6 million instead of receiving the money in the form of yearly payouts and has spent it on a series of real estate purchases.
And the 31-year-old's accumulated quite the portfolio - from a $25.5 million Hollywood Hills house, $4 million mansion also in California and now a $47 million mansion in Los Angeles.
Like me, you may have initially thought Castro's focus on real estate was pretty savvy - although maybe most of us would've chosen properties a little more low-key - but according to a financial expert, the 31-year-old's spending goes against advice.
First off, lottery winners are typically advised to go with the annual payout option opposed to the immediate lump sum.
And if they do opt for the latter, they're advised to consult with a tax lawyer or financial planner to help figure out how best to manage the sudden massive influx of cash.
Managing director of advice and planning at Wells Fargo's investing and wealth management division shared the advice she gives lottery winner with Fortune: "Don’t make any visible life changes. Don’t quit your job, don’t go out and buy a Ferrari, don’t buy a mansion.
"Maybe you have student loans you want to pay off, that makes sense. But try to avoid that mega-purchase."
Moment Wealth advisor Jacob Turner took to X - formerly known as Twitter - to give his view, claiming Castro has done 'everything you read not to do'.
He says: "He purchased a $25.5 million home a month after winning. He purchased a $4 million property near where he bought the ticket.
"He most recently purchased a $47 million home overlooking Los Angeles. That is $76 million of homes for those keeping track. In addition, he is reportedly rolling around in high-priced antique sports cars."
However, Turner notes despite Castro seriously splashing the cash, he actually 'might be able to afford his current lifestyle'.
Turner works out if Castro 'invested the rest of the money in a diversified portfolio' he could spend $16,575,000 (£13,652,661) per year 'without dipping into the principal' - taking into account 'a withdrawal rate of three percent' too.
After spending 'between two-three million a year' on his three mansion's maintenance, insurance and property taxes, Turner resolves Castro would still have $1 million (£820,000) per month for his 'lifestyle'.
So, even though the lottery winner didn't take the typical advice, it seems he'll probably be alright - and that's to say the least.
Poppy Bilderbeck