Financial Advice for Lottery Winners

By Casey Shaw, Financial Advisor

Lottery prize pools now amass huge amounts, regularly turning everyday Aussies into instant multi-millionaires. But being ‘struck rich’ is not only based on luck. There is more than $2.6 trillion worth of assets invested in superannuation in Australia.

A multi-million dollar inheritance can be a life-changer. Regardless of the source, most people who receive unexpected money are launched on an emotional roller coaster ride.

Let’s use a big lottery win as an example for this article:

  1. The first emotion is usually sheer delight – Woohoo! Aren’t I lucky! (although if it’s a massive win, the first feeling might be utter shock!).
  2. Relief generally follows quickly – I don’t have to worry about money anymore.
  3. Then indecision – What should I do with it?

Regardless of how your windfall landed, here are some ideas to help you make the most of it.

Bank it

Put it in a bank account where it will earn a safe and reasonable return. Online savings accounts currently pay similar returns to term deposits and give you easy access to your cash once you’ve decided how to manage it. On a large sum of money, you could still earn considerable interest – but remember it will be taxed at your marginal tax rate.

Spend it

This is a popular action but it may later leave you with the regret of wasted opportunities. The media is full of stories about lottery winners who were broke a few years after they won millions. Sure, put some aside to have a good time, but don’t go silly.

Clear debt

This is generally the smartest option. Take a lump sum to pay off debts, particularly those that are non-deductible like mortgages, personal loans and credit cards. This strategy will reduce future living costs and increase the possibility of borrowing against the equity in your home to invest further if appropriate.

Save it

Putting money into superannuation can be a good strategy to reduce tax on your investment earnings, but it means the money is locked away. Of course, this might be a good thing because it can’t be accessed and spent. Remember though there are limits on contribution amounts and account balances and financial penalties apply if breached.

Invest it

Depending on your goals you could build an investment portfolio to invest in a range of assets and make it work hard for you over the coming years. Maybe you could live off your investment income without impacting on the capital.

Share it

You could share it with family, friends or help the needy. Donations to registered charities are tax-deductible. If it is a substantial amount you could set up a Private Ancillary Fund – ask us for details on these.

Do them all

Of course, you don’t have to pick only one of these strategies. Depending on the size of your windfall, you could do it all.

Whether your instant wealth was created through a happy or sad event, often the difficulty is making a choice and everyone around you will have an opinion. Always seek professional guidance. Contact us to help you evaluate the options available for your own circumstances so the money will help your life, not hurt it.


ASFA Research and Resource Centre “Superannuation and high account balances” April 2015 (Latest edition) ‘Superannuation Statistics’ (March 2018)

Casey Shaw is an authorised representative and credit representative of AMP Financial Planning. Blueprint Planning Pty Ltd (ABN78 097 264 554), trading as Blueprint Wealth, is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee 232 706.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.