Lately I’ve been thinking about some friends who won the lottery quite a few years ago. We’re talking twenty-ish years, give or take.
Yes, I have personal friends who were big lottery winners. At the time they won, they were already friends of some close family members, and through a certain set of circumstances, they became good personal friends of myself and my wife not long after.
They were good enough friends that we went to visit and stayed in their home, and they came to visit and stayed in ours.
For the sake of keeping their identity private, I’m being vague about some of their details. I will say, though, that in today’s dollars (that is, adjusted for inflation) their win was in the $35 to $40 million range. And that’s after taxes.
At least, that’s what they had when the husband talked to me about their finances. At that time, their net worth had likely increased through their business dealings after winning the lottery.
Back then, I had nothing to do with lotteries at all. And while it may sound odd to some to say it, I was more interested in what they were doing with their wealth than in the wealth itself.
Because they were doing some really good things. They had become heavily involved in philanthropy, and that interested me. It was a topic that I was pretty heavily into at the time.
In addition to the philanthropy, and their business interests — which were quite considerable — they had purchased a big home for themselves. My wife and I went and visited them a time or two, and stayed for several days when we did. We were given not just a bedroom, but a suite of rooms to stay in. The whole thing was fun, of course. But it wasn’t just staying in such a big place. The fun was largely because our friends were genuinely really good people
We didn’t spend all of our time in the big house. We went out and did things with our friends. But oddly, other than the fact that it involved eating, I don’t really remember that much about what we did.
The most vivid memory I have is of my friend showing me some of his investing online. This was back in the early days of online trading, but my friend was very up-to-date.
I remember staring at his portfolio — which accounting for inflation would be worth about $5 million today — and feeling uncomfortable. A little bit of the discomfort was due simply to looking at the finances of someone who had a whole lot more money than I did. But most of the discomfort came from a thought that I have never forgotten:
“If I had that much money to invest, I think I would invest it differently.”
Or, to put it another way: His investing style worried me.
I didn’t tell him this. Maybe I should have. But I know in my heart that even if I had, it wouldn’t have made any difference. He would not have listened. Because I simply didn’t have the authority to command his attention on the issue.
He was the big businessman, and I wasn’t. And in fact, by the time of this incident he had been in business for several years, and his business interests were still doing really well.
Two or three years later we learned that our friends were going through some difficulties. There was a lawsuit involved.
Now our friends had the great majority of their money in a single business. Probably about everything except for the mansion and the investment portfolio I’d looked at was in their one business. So the business was worth maybe $30 to $35 million in today’s dollars.
And this business had previously been doing fine, but now things had turned sour. There was at least one lawsuit involved. And it had nothing to with anything that was my friends’ fault.
In fact, they were the plaintiffs, against a business partner.
The lawsuit dragged on for several years, with the other side (who had even more cash than my friends did) using every trick they could pull to make it last forever.
Somewhere along the way, our friends pretty much ran out of cash, and he took a blue-collar job to help make ends meet.
When it was finally over, our friends had won. But it wasn’t much of a victory. The legal fees had piled up, the company itself was pretty much worthless, and our friends were — if not entirely broke — at least fairly close.
It goes without saying that they lost the mansion.
And no, they didn’t end up quite penniless. But they certainly moved from being mega-wealthy to being those-folks-down-the-street-who-used-to-be-really-rich.
So why am I sharing all this? I don’t know. Just because I’ve been thinking about it a lot lately.
It’s a personal experience — at least, as personal as it might be given that I wasn’t the one who lost the fortune — that says once again that wealth, and especially wealth achieved suddenly, is not necessarily a lifelong condition.
Are there things our friends could’ve done to avoid going broke? Yes. In this case, they might have been helped by better planning, avoiding putting so many of their eggs in one basket, and above all — not thinking they were immune from losing what they had.