Saturday, October 1

How to invest and make profitable the prizes of the Christmas Lottery?

The collection management company KRUK Spain has asked the population what wish they would make come true if they won the lottery. Almost half of the people surveyed (49.1%) would invest their earnings in buying a home or paying the mortgage; 36.2% would go on a trip; 34.8% would save it in the bank for possible unforeseen events and 28.6% would share it with family and friends.

In addition, more than half of the surveyed sample (53.3%) admit that, although the money they have is enough to cover their usual needs, they have problems to face large extraordinary expenses.

From Abante Asesores recommend take six months of time before you start spending or investing money (Here it should be remembered that the law gives a maximum period of 3 months to collect the tenth).

“It is about using that period so that we get used to living with a high amount of money, avoiding whims and reflecting on what we really want to achieve with that extra money that we have in the account and what are our vital goals. That is, an exercise of financial planning to think about what our goals are and contextualize the award in our financial and vital plan, so that we can draw up an investment plan that adapts to the new circumstances and that takes into account our objectives, present and future, “they point out from Abante .

If you decide to invest the money compared to other alternatives such as starting a business, paying off a mortgage or buying a house, it is important to follow a series of tips and guidelines to make the money profitable and take advantage of it. If you choose to save part or all of the prize it is best not to leave the money standing in a checking account in a situation like the current one with inflation on the rise, above 5%.

“It is advisable not to have money standing in the checking account, regardless of the reason why that money has come to us (income from work, rents, the lottery …). With a zero deposit remuneration, saving is necessary, but It is not enough, if one takes into account the perverse effect that inflation generates on the money that we have and that we will not need. In case of being awarded with a lottery prize, the only alternative not to be impoverished with the step of time is investing the money, “explains Amilcar Barrios, investment manager at Wealth Solutions.

“It is not about investing in any way. Before doing so, it will be essential to define the objectives that you want to achieve, as well as the time horizons, in which you want to achieve them. In this way, two objectives will be achieved: not to have an excess of treasury, which has an opportunity cost (if it is not going to be needed, it must be invested). On the other hand, we will have a responsible allocation of resources and adjusted to the objectives and personal needs at all times, “he says.

Although past profitability does not guarantee future profitability equities are the place that can best protect against inflation as long as it is done with an investment plan according to our profile. It is also important to do it under the advice of professionals and thinking in the long term. Inflation-linked bonds would be another option for more conservative or moderate profiles.

“To maximize the prize money you have to bet on diversified portfolios, both by geographic distribution, as well as by sectors and type of assets. In addition, if you have a long investment time horizon, you can assume more risk with the investment, which will make the final capital much higher, “they indicate from Abante.

Taxation of the awards

The prizes obtained in the Christmas Lottery are taxed from 40,000 euros. The higher prizes will be taxed by the special tax on lottery and betting prizes, currently 20%, and will not be included in the income tax return of the recipient.

In the case of the Christmas Lottery Jackpot of the full 400,000 euros of one tenth, the winner will receive in cash only 328,000 euros net, since, despite the fact that the first € 40,000 are exempt from tax, on the remaining 360,000 euros A 20% withholding tax is applied, equivalent to 72,000 euros, which will go to the public coffers.

Hacienda will be able to win this year 156.5 million in the traditional Christmas Lottery draw if the first three prizes are distributed, according to the calculations of the Technicians of the Ministry of Finance (Gestha).

In this way, the “bonus” for the public coffers is maintained since the minimum exempt from taxation was increased on January 1 of last year 2020 to 40,000 euros, from the 20,000 euros exempt in 2019.

“In the event that the award is jointly owned, the exempt minimum will be prorated among all the holders, and all of them must go to collect the award from the bank and identify themselves as beneficiaries of it, so that the corresponding withholding is applied. proportionally to all of them. In the event that only one of the award holders is identified as the beneficiary, the withholding would only be applied to this person, and when distributing the award to the rest of the holders, the Tax Administration could consider it as a donation, and make them pay taxes in the Inheritance and Gift Tax (ISD) ”, explains Ernesto Campos, head of the tax department and economic consulting at Sanz Torró – Legal & Tax.

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