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Edwin Castro, winner of a $2 billion Powerball prize, is making a big financial mistake, according to financial experts. Castro has purchased multiple mansions in California and even a vintage Porsche 911, as reported by the New York Post in April.
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After winning the Powerball jackpot in November 2022, Castro chose the almost $1 billion cash option and walked away with $628 million after paying the required federal tax withholdings, Fortune reported. Financial advisors typically recommend collecting the payout through an annuity over 29 years.
According to Annuity.org, lottery winners have lump sum or annuity options, and the choice can affect how much the winner gets by millions of dollars. The lump sum option allows for immediate investments, and many opt for this to avoid long-term tax implications. However, annuity payments provide tax benefits, prevent overspending and provide a steady stream of income over time.
Since winning, Castro has purchased a three-story $25.5 million mansion in Hollywood Hills, which Fortune estimated at $255,000 to over $1 million annually on upkeep. The home has five bedrooms, six bathrooms, a game room, wine cellar, home theater, wet bar, gym, cold plunge, steam shower and sauna. Weeks later, Castro purchased a $4 million Japanese-inspired house in Altadena, California, and then a $47 million mansion in Los Angeles earlier in September 2023.
But that’s not all. Castro also spent $250,000 on a vintage Porsche 911.
Financial advisors recommend lottery winners or anyone else coming into a large amount of wealth consult with a financial adviser, tax attorney or other experts to create a plan, Fortune said.
“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,” Emily Irwin, managing director of advice and planning at Wells Fargo’s investing and wealth management division, previously told Fortune.
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“Maybe you have student loans you want to pay off, that makes sense. But try to avoid that mega-purchase,” Irwin added.
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This article originally appeared on GOBankingRates.com: 4 Terrible Purchases Made by the $2 Billion Powerball Winner, According to Financial Planners