Goldman Sachs Elevator wasn’t joking when he tweeted: “80% of lottery winners go broke because 100% of lottery players are f***ing idiots.”
Throughout history, countless of those favoured against astronomical odds have squandered their windfalls and essentially ended up back at square one (if not worse). And Edwin Castro, recipient of that record-breaking $2 billion Powerball prize ($628 million lump sum after taxes), is apparently on track to follow this time-honoured tradition.
In defiance of every rule in the financial planning book — which includes waiting for the emotional high to wear off months after the fact before making any purchases, avoiding expensive (potentially illiquid) property altogether — our new-age Gatsby has reportedly been on quite a spending spree ever since he banked his winnings back in November 2022.
Notable assets Edwin Castro has acquired over the past year that we know of include the following (some snapped up within weeks of each other):
- A $47 million LA mega-mansion (seven bedrooms, infinity pool wellness facility, home theatre, champagne room… the works)
- A $25.5 million mansion in the Hollywood Hills near A-listers such as Leonardo DiCaprio and Ariana Grande
- A $4 million Japanese-inspired pad in Altadena, California (his hometown near the gas station where the lottery ticket was purchased)
- Custom Italian furniture and gaming tables from 11 Ravens Billiards
- A vintage Porsche 911 for approximately $250,000
As per Fortune, the value of second/third homes and mansions are quickly shrinking in the post-pandemic era; with luxury real estate traditionally having something of a reputation for being not the greatest of investments given its vulnerability in the face of economic conditions beyond the owner’s control.
“I’ve seen clients purchase large homes in faraway locations that they ultimately realise they will not use frequently,” Paul Karger, Co-Founder and Managing Partner at the TwinFocus wealth advisory firm, explained to the noted financial publication.
“And end up being a major ongoing financial burden that took several years to sell… Just chill. Don’t make any major decisions or big commitments. Let things digest.”
It’s also worth noting the annual cost to maintain properties of this calibre in the US is approximately 1% to 4% of its total value.
“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,” added Emily Irwin of Wells Fargo.
“Maybe you have student loans you want to pay off, that makes sense. But try to avoid that mega-purchase.”
Edwin Castro’s first strike, however, occurred before he even spent a dime. Had he opted to collect his full $2 billion prize through an annuity across 29 years, he wouldn’t have surrendered almost $1.4 billion outright.
“People don’t understand there is a potential for loss. They only focus on the potential for gain,” Nicholas Bunio, yet another financial planner, told the Associated Press when Castro first made headlines.