A story broke today that Jason Mandara, a minimum wage shelf stacker at Tesco, handed his notice in after winning £1.3 million gambling on the Betfair Mobile App. This sort of thing happens all the time. Mostly to lottery winners. But then why do most lottery winners end up back in their original financial position within 2 years of winning?
The answer is mindset. Unfortunately, a mind that’s not capable of making a million pounds is often not capable of keeping it.
When asked what they’re going to do with the money, most instant millionaires say they’re going to buy a new house, a new car, a fancy holiday and spend on parties.
Here’s the problem with that. With the exception of the house – which we’ll come to in a moment – a car, a holiday and a good Christmas are all liabilities. A car eats money. A holiday is one of the fastest ways to burn through money. And Christmas will be over in three months.
The house is a bit of a grey area. Yes, they’ll have a house, but if they live in it, it won’t yield a return. Furthermore, it will incur repairs sooner or later. And they may be repairs that cannot be afforded on a minimum wage salary.
As such, unless some effort is made to make the money yield more money, it is unwise to increase your spending, if you cannot increase your earnings.
So what should you do if you win a million pounds?
In a word, you should invest it. If you invest £1.3 million in the stock market, especially right now, when there are some superb dividends available, you could realistically produce a passive income starting at £84,500 a year for the rest of your life. That WOULD change your life.
If you didn’t want to go down the stock market route, you could invest in property instead. You could buy a few properties outright, in the right area, with that kind of money, and yield a between £30-60k a year for the rest of your life.