The grand prize of $10,000,000 will be paid out as... $5,800,000? I don't understand how you justify saying (as far as I can tell) "The grand prize is $10,000,000. We reckon you could invest $5,800,000 and make $10,000,000 in 40 years, so we will give you $5,800,000 instead".
A fair point for sure. The rationale is the $10 million headline is the annuity value of the jackpot, and it's standard practice for sweepstakes or the PowerBall/MegaMillions contests to use the annuity value for promotion in marketing materials and on the website.
Yeah exactly. Almost any grand prize you see is really the sum of the annuity value. We kind of have to use the same practice in order to be competitive, and we think a lot of people assume it's the annuity value sum as well. (https://www.magnifymoney.com/blog/banking/powerball-annuity/)
It’s common knowledge that jackpots have an annuity or a lesser lump sum, that’s how lotteries work already. This is really just a way to gamify savings as a lottery, I think it’s a great idea and may sign up. I have a really low yield savings account right now anyway and was planning to sign up for an online high yield account.
You're talking about lotteries. I'm talking about savings accounts. My point is that savings accounts should be held to a higher standard, because obviously.
But this product is literally a savings account with a lottery attached to it. Why would you not use the terminology/methods used by the lottery industry when describing the lottery aspects of the account?
I think you could flip the status quo on its head, by promoting a full 10M (or 5M...), and making it clear it is NOT the annuity value sum like you do for lesser prizes, since I would argue that your competitivity/differentiation comes from the fact that you don't lose money to play.
Also describing the lottery mechanism without any gotcha is the right thing to do for consumers, and being in the unique position you are, you have the opportunity to lead that change.
Somewhere I read an argument that numbers games (private, local lotteries, sometimes run by organized crime) helped some poor people by acting as a form of savings, except one that paid a negative interest rate and where you couldn't control the timing of when you got your savings out.
That sounds like a super-awful kind of savings account, but I think this argument assumed that many numbers-game players' next-most-preferred use of the money they would bet on it was even less like savings, so it could still be helpful by pulling money away from other things. Of course, that's a pretty big and pretty specific assumption.
This project and the idea that inspired it are a way better form of savings because the savers can actually access their principal and don't actually have to pay the bank.
However, they (Powerball, whoever) buy the annuity I think. If you give a lump sum, then after paying whatever taxes, would I still be able to buy the annuity?
First, the difference between being mistaken and lying is intent. The site guidelines call for being charitable. So unless you can prove intent, don't call out someone for lying.
Second: Just saying someone is wrong/mistaken/lying turns into a five-year-old's argument: "Am not!" "Are too!" That's not a useful conversation, nor even an interesting one. Instead, supply some evidence that the rest of us can look at and judge whether you're right. (Actual evidence might even convince the person you were replying to - some of us here do actually listen to facts from time to time.)
This isn't tax, you'll still have to pay income (or whatever) tax on the $5,800,000. This is them deciding to give you less money, and claiming with careful investment you could make $10,000,000 over the next 40 years.
I think it will always make sense to show gross salary. Various things can affect tax rate, such as 401k and HSA pre-tax withholdings, and the income of your spouse.
