what’s the difference between the annuity and cash value option in the lottery? Which is better and why?
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Annuity pays over the lifetime of the lotto period.
For example, they’ll say the lottery is worth $100 million. That means that, in 20 years, it’ll be worth $100 million, although it might only be $50 million right now, so they’ll invest it in treasuries or something safe so it’ll be “worth” $100 million in today’s dollars in 20 years.
You then get a check every year for a fraction of that so *in total* you’ll get $100 million in checks over 20 years.
The cash option is the value it actually is, $50 million. So they cut you a check for that, and it’s up to you to invest it to make the $100 million advertised, even though that’s only an annuity option thing.
Most people take the cash option. It’s pretty rare that someone takes the annuity option, as you can invest and make far more than the annuity option. Or you want all that money at once.
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