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Quebec Teen Wins the Jackpot on Her 18th Birthday

A Canadian teenager who bought her first lottery ticket to celebrate her 18th birthday took home the jackpot prize in the Gagnant a Vie lottery. Charlie Lagarde chose the CA$1,000 weekly lifetime annuity over the option to be paid CA$1 million.

Lagarde, who lives in the Monteregie area southeast of Montreal, decided to mark her entry into adulthood by buying a bottle of champagne and a scratch ticket for the Gagnant a Vie lottery on March 14. The $4 lottery ticket, purchased at a convenience store, turned out be the lucky one. She won the grand prize and was given the opportunity to either take the lump sum of $1 million or receive $1,000 a week for the rest of her life.

The young winner took a few weeks to decide on the best option for her and saw a financial advisor, according to the announcement made by Loto-Quebec. The expert told her that considering her age, she should opt for the weekly annuity of $1,000. She chose this option because this way, the amount is not taxed. Patrice Lavoie, a spokesman for the crown corporation, said that due to the lack of taxes, the monthly payments will be the equivalent to an annual salary of more than $100,000.

The teenager claimed the prize Monday, March 26, at Loto-Quebec’s head office in Montreal. When asked about her plans and what she intends to do with the money, Lagarde said she wanted to travel and to study photography, while her dream was to work for the National Geographic one day.

Lump Sum or Annuity Payments?

How many of us would choose the weekly annuity over the attractive lump sum of $1 million? Most jackpot winners opt for the huge one-time payment without thinking too much. Interestingly enough, many financial experts would also give you the same piece of advice despite the fact that in most countries lottery winnings are taxed when paid at once. In the United States, winners need to pay taxes for both options. But why did Charlie Lagarde’s financial advisor told her to pick the weekly payments?

According to most financial experts, it is always better to get your jackpot in cash and pay the taxes immediately, while they are reasonable enough than receive weekly or annual payments, where the tax may increase over time. In theory, the financial logic says that a well-planned asset allocated portfolio built with the jackpot winnings is a much better option than an annuity lifetime income. However, real life is very different from the theory and there are numerous cases of jackpot winners who file for bankruptcy a few years after winning big.

The truth is that most people are not good at wealth management and there is always the risk to lose all your money due to bad investment decisions, spending on luxury items and giving huge sums to family members and friends. This is why Lagarde’s decision to choose the weekly annuity is a wise one, especially given her age. The lack of taxes in this option, however, is even more important.