www.alainguillot.com/broke-af...
This is the story Lara Griffiths and her husband, who won 1.8 million pounds lottery prize (about 2.254 USD) in England and lost it all in about 8 years.
They bought a house, many automobiles, designer bags, she opened a hair saloon (which failed), and he started a rock band.
Eventually they ran out of money. They got a divorce and now Lara and her two daughters with Lara’s mother. She works seven days a week running a tattoo parlor from a shed in her garden.
Unfortunately, this story is way too common. Here are examples of well known personalities who earned money fast and lost it all even faster.
Mike Tyson: The former heavyweight boxing champion earned hundreds of millions of dollars throughout his career but he lost it, at one time he went to prison, and had to file for bankruptcy in 2003.
MC Hammer: The rapper achieved immense success and wealth in the early 1990s but faced financial difficulties due to overspending and poor management, eventually he declared bankruptcy in 1996.
Lindsay Lohan: While primarily known as an actress, Lohan also ventured into music and fashion. However, due to drugs and a crazy lifestyle, she lost most of her money.
Antoine Walker: The former NBA star earned over $130 million during his career but faced financial ruin due to poor investments and extravagant spending habits. Here he recalls some of his crazy years.
Capitalism is hard. Becoming rich and staying rich, require two different skillsets. Practically anyone can become rich, but staying rich is more difficult.
Becoming rich requires taking risks, being optimistic, and putting yourself out there.
But staying rich requires the opposite of taking risk. It requires humility, it requires the knowledge that you can lose all your money just as fast. It requires frugality and an acceptance that at least some of what you’ve made is due to luck.
My tip for anyone who earns a significant amount of money is to put it all in the S&P 500, apply the 4% rule and withdraw 4% every year.
In the case of Laura, that would have given her over $90K on the first year with the potential to grow more every year, plus she would still have her capital intact because her capital would grow at a faster rate than 4%.
What would you do if you win the lottery or get a huge inertance? Please let me know in the comments.