After three months without a winner, a lucky ticket holder in California has finally won the $1.08 billion Powerball jackpot — the third-highest in history.
The ticket was purchased in the Las Palmitas Mini Market in downtown Los Angeles. The winner now has a choice of an annuitized prize of $1.08 billion or a lump sum payment of $558.1 million.
The annuity payout is spread out over 30 years, while the lump sum is paid right away. Most winners choose the lump sum payout, even though it's less than half of the jackpot's listed amount, because those funds can be reinvested right away, rather than incrementally over 30 years.
However, Mark Cuban, self-made billionaire and star of ABC's "Shark Tank," has a different take on what the winner should do with the money.
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Why Mark Cuban says the winner should take the annuity
When it comes to large jackpots, Cuban says that it's simply safer to keep most of the money in the bank, rather than risk it on investments that might not pay off.
"Don't take the lump sum," Cuban told the Dallas Morning News in 2016. "You don't want to blow it all in one spot."
Money Report
While it might be tempting to take the lump sum and grow the money quickly with investments, it's not worth the risk, he says.
"You don't become a smart investor when you win the lottery," says Cuban. "Don't make investments. You can put it in the bank and live comfortably. Forever."
Plus, with the annuity you get the full jackpot amount, which is plenty to live on.
Cuban's other piece of advice to big winners: "Hire a tax attorney first," before you claim the money. They will help you figure out a plan to ensure that you make the most of your annuity.
And whatever payout the winner chooses, they should expect their life to change. "If you were happy yesterday, you are going to be a lot happier tomorrow," Cuban told the Dallas Morning News. "Life gets easier when you don't have to worry about the bills."
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
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