Monthly Archives: April 2018

Is Winning the Lottery a Poisoned Chalice?


April 30, 2018

The recent “Powerball” prize of $570 million prompted me to consider whether winning the lottery is actually a good thing, especially when the lucky winner took extraordinary steps to remain anonymous. Before you purchase your next lottery ticket bear in mind that the chance of winning this recent lottery was about 1 in 292 million. By comparison the probability of being struck by lightning in the USA in a given year is much more likely, at approximately 1 in 700,000 according to National Geographic.

Of course for many buying a lottery ticket is more about entertainment, especially when the potential winnings get really large. People can have so much fun playing the “what if we won” game, that the $1 spent represents a real bargain!

I was given a close up view of the so-called “lottery” effect about ten years ago. I met a lady who had won $500,000 in the scratch off lottery. She was a friend’s niece, and she came to see me to get some independent advice before she was ‘taken advantage of’. The start point of our discussion was to recognize that the Government’s tax bite out of the winnings would reduce her net prize to approximately $300,000. The next issue was the requests from many family members, including some with previously unknown relationships, for a share of the prize. The justifications were various and included paying off debt, or simply having some additional spending money. A common refrain was “that only seems fair”! The minister from her local church had already suggested that tithing was appropriate. Moreover, his view was that a 10% tithe should be applied to the pre-tax sum, and there was really no further discussion on that matter. So very quickly taxes, relatives, and the tithe had reduced the headline $500,000 winnings to about $220,000.

I urged her to pay-off her mortgage, credit card debts and personal loans. I was relieved when she took my advice. She now had $160,000 left. The next part of our discussion was about how this should be invested. My concern for this particular individual was that she should find some investment on which she could rely for a very long period of time, because she had no interest in learning about investing or meeting with anyone on a periodic basis. It had to be a simple, one-time decision. So I suggested the Vanguard Balanced Fund with a monthly or quarterly distribution of income to her. At that time it was one of the lowest cost options and it was simple to explain and hopefully for her to understand.

Alas, I never saw her again, so I do not know whether she followed through. I suspect not. This then got me thinking whether the better option for people in this situation is not to take a lump sum but an annuity. While we are not big fans of annuities, it seemed that this might be a way to protect an unsophisticated recipient from the many outstretched hands and the pressures of responsibly handling a large amount of cash!

Nick Hoffman


Eco Boom South of the Border

eco boom

April 23, 2018


Last week I spent a good amount of my free time packing and getting ready for a move to a “new” apartment. As I went through my belongings, I came across old electronic devices and a collection of cords that had fallen into the category of obsolete. My stock of discards steadily increased, and I became increasingly pleased that my apartment complex provided the option of recycling items that otherwise would end in a landfill. Being in this environmentally conscious mindset made me think of a special place south of the border where warm waters and nature abound.


Many people will be familiar with a small town south of Cancun in the Riviera Maya called Tulum. This town is attractive to tourists for several reasons. It has beautiful beaches and the well preserved remains of a walled Mayan city. In addition, a very important part of the appeal is the “hippie” vibe of Tulum that comes from the beauty of the surrounding area. Yet, many come for the nature.  The Tulum district has the UNESCO World Heritage Site called the Biosphere Reserve of Sian Ka’an providing eco tours for the environmentally conscious traveler. Sian Ka’an is home to thousands of species of flora and fauna and is now the largest protected area in the Mexican Caribbean.  Nature tours into the lagoons and coastal wetlands of the reserve appeal to the nature lover.

Tulum has seen more growth in the past 10 years than any other place in the area, with 4.7 million tourists visiting the region in 2016. This quiet town in the middle of the jungle has now more than 120 5,000-room resorts that receive guests from all over the world.  Some of these resorts even lack of electricity services as part of their eco-friendly appeal. With this rapid growth and uncontrolled development, most hotel groups look for a return on investment of two to three years. The resorts stay mostly booked all year round, and rates can go up to several thousand dollars a night during the peak season.  All of this growth has caused Cancun’s airport to become the second busiest in Mexico.

What once was an undeveloped town with no international attention has now become one of the most expensive places to live in Mexico. Tulum appeals not only to the eco-chic crowd that travel/live under a budget, but also to the luxury resort adventure seekers. It all depends on how lavishly or inexpensively you’d like for it to be. From snorkeling, to spa days, to hot yoga, this town covers all travelers’ desires.

Eco-tourism has become an important revenue driver in Mexico. Tourism contributes $19.6 billion to Mexico’s economy, which is equal to about 7% of its GDP and almost 8% of total employment. Whether it is in Mexico’s newly developed paradise, or any other vacation destination, one thing remains true – we need to put in our two cents to preserve our planet. Reduce, reuse, and recycle should be part of our traditions.

Nirvanna Silva