The question of whether to take the annuity or the lump sum for a lottery winner is an important one. Each has its advantages: The annuity guarantees moderation and the lump sum can maximize total windfall thanks to investing.
But one man in Georgia has gone down a unique path that involved neither squandering on toys or success in the stock market. Instead, Ronnie Music Jr. took his $3 million dollar check from the Georgia Lottery and decided to invest in methamphetamine, federal prosecutors say. In terms of an investment, the New York Times called his business “thriving,” but after being caught with over $1 million worth of guns, drugs, and vehicles, Mr. Music is now facing amused contempt and jail time from justice department.
“Defendant Music decided to test his luck by sinking millions of dollars of lottery winnings into the purchase and sale of crystal meth,” US Attorney Ed Tarver said in a statement. “As a result of his unsound investment strategy, Music now faces decades in a federal prison.”
This cautionary tale may provide more evidence that the annuity is the best option, given that the moderation it provides prevents losing it all due to mismanagement, because there’s always future payments. We humans may not always make the most rational investing decisions, especially if we’re people who enjoy the lottery, literally a game of chance and luck. And if luck brought the riches, why not use it again?
For Mr. Music, who has pleaded guilty, there’s no reason to think it would have been any different with the annuity. It seems likely that a smaller payout would have simply reduced the scale of the operation. In fact, the relative paucity of the annuity could have resulted in a greater lust for return on his illegal investment. Though it’s impossible to say for sure, the lump sum may have been one of the few correct decisions he made.