Winning the lottery sounds like a lot of fun, doesn’t it?
I’ll tell you who’s having fun right now. A California guy named Edwin Castro became the richest Powerball winner in history last November after taking the $2.04 billion jackpot.
Castro opted for the lump sum payment of $997 million. After Uncle Sam took its cut, he got $628.5 million.
Since then, Castro has…umm, spent a little of that money.
Including his latest purchase, a seven-bedroom, 11-bathroom $47 million Bel Air mansion with a champagne tasting room.
Yes, that wasn’t a typo.
There’s a whole f$cking room dedicated to tasting champagne.
Why am I telling you this?
There’s a good reason.
The $2 billion disaster
I’ll start out with the punchline: Wealth that is either won or inherited almost never lasts. It’s been proven (link further down).
Wondering what this $47 million estate looks like?
Here she is:
In addition to the seven bedrooms and 11 bathrooms (and the freaking champagne tasting room), the house features a huge outdoor pool, a wine cellar (of course), a suspended glass walkway, and a theater room.
Castro also bought a vintage Porsche 911, another $25 million Hollywood Hills estate, and a relatively cheap $4 million mansion with sweet views of the San Gabriel mountains.
There are two ways to look at this situation:
1: Hell yeah, bro! Have fun with that wealth because you only live once, dude! Live like a rockstar, homie! Enjoy it.
2: Edwin, what the hell are you doing? You’ll blow through that money so fast that you’ll be working at McDonald’s before you know it!
Regardless of which one you choose, Castro clearly illustrates a phenomenon that’s existed for decades:
Unearned wealth doesn’t last.
Lottery winners routinely blow through their winnings (one study showed nearly 70% of lottery winners go bankrupt); in the case of inheritance, wealth is usually gone by the third generation.
Nasdaq said an estimated 70% of wealthy families lose their wealth by the second generation and 90% by the third.
Despite what most believe, I’ve written at length that most millionaires don’t get rich by inheriting wealth. The evidence is literally all over the place. And even those who DO inherit wealth likely won’t have much left by the end of their lifetime anyway.
Sad, but true.
Now, I’ll give Edwin Castro the benefit of the doubt because I don’t know his plans for the rest of his dough. He’s probably spent around 15+ percent of his winnings within a year of securing the jackpot.
Maybe he’s investing $500 million in the market. Maybe he plans on offering high-end Airbnb rentals at his mansions. Maybe he’s giving a sizeable portion to charity. The fact is, I don’t know.
But so far, he’s spending like a sailor, and sailors don’t stop.
Worse, his picture is all over the news. People know what he looks like, one of the cars he drives (the vintage Porshe), and the real estate he’s bought. I hope he’s hired private security with some of that dough.
The point is simple: The phrase “Easy come, easy go” exists for a reason.
Good for Castro for winning it big – legit happy for him.
But if he continues spending the way he is, he’ll wind up like so many other lottery winners, sports stars, and celebrities who spent BIG when the going was good but left with very little because they couldn’t put the brakes on the pricey lifestyle they grew accustomed to.
Chat next week!
– Steve
