How did this guy blow all his money after winning $2 billion in the lottery?

Edwin Castro won the Powerball jackpot in the United States in 2022, taking home $628 million (after taxes) in a lump sum. Financial advisors directly commented: this guy's upcoming moves can be considered textbook “new money mistakes.”

What did he buy?

Luxury Mansion Trio

• Hollywood Hills Mansion: $25.5 million (annual maintenance fee $2.55 million - $1 million, experience it yourself)
• Japanese-style villa: $4 million (Altadena, California)
• Los Angeles Mansion: $47 million (acquired in September 2023)

There is also an old car

• Old model Porsche 911: $250,000

Just these few strokes cost over 70 million, while he only has a total of 628 million.

Why are financial advisors shaking their heads?

The standard answer given by the financial planner is: These are all basic mistakes.

1. Chose the wrong method of receiving money: Castro opted for a lump sum payment after taxes. However, most advisors recommend choosing an annuity system (29-year installment), which can reduce tax burden and prevent you from squandering the money in a short period.

2. Buy a house, buy a house, buy a house: The annual maintenance cost of a luxury home is a bottomless pit, especially for such extravagant properties. The maintenance cost of a house worth 25.5 million can consume a significant portion of its liquid assets.

3. Completely Unplanned: Emily Irwin, the head of wealth management at Wells Fargo, said something that hits hard: “Don't quit your job immediately, don't buy a Ferrari, don't buy a mansion.” This guy Castro did all of that.

What do experts say?

Professional financial advisors suggest one word: slow. If you hit the jackpot, don't rush to spend; find a tax lawyer and a financial advisor to create a long-term plan. Those who are eager to squander? Statistics show that 70% of lottery winners will go broke within five years.

The case of Castro is a living example of the opposite.