BARRIO (7 News) – Thirty-one-year-old Edwin Castro became rich beyond his wildest dreams after collecting a record $3.2 billion from American Powerball.
But it’s how he spent some of the lump sum that has had financial experts sounding a warning – should others be in the enviable position of getting so rich so quickly.
Castro opted to invest some of his not-so-hard-earned millions in plum real estate, scooping up not one, but three, multi-million-dollar mansions.
His purchase of the properties – worth $73 million, $40 million and $6.2 million – has money gurus suggesting the “mega purchases” could send the overnight billionaire broke.
The Californian local bought his first two mega mansions barely four weeks apart.
One property is in Hollywood Hills, with neighbours including Brad Pitt and Kim Kardashian, and the other has views of the San Gabriel Mountains.
His latest purchase is his most opulent – a $73 million mansion on a 4700-square-metre block in Bel Air, the same LA neighbourhood as Beyonce.
The lavish home has seven bedrooms and a whopping 11 bathrooms.
And the luxuries don’t end there.
The house features a wine cellar and a bar, a suspended glass walkway, a movie theatre and an infinity pool with uninterrupted views of LA.
The master bathroom is finished with symmetrical his-and-her features alongside a golden light feature dangling above the centred bathtub.
The luxe listing was previously owned by celebrity dermatologist Alex Khadavi.
Castro has also splashed on a vintage Porsche 911 to park inside one of the many garages.
But his extravagant spending has stunned financial planners.
Money experts suggest anyone coming into a significant windfall should collect their money in increments – if possible – rather than receiving one large sum of money.
But they say the most important thing for new lottery winners, or anyone inheriting money, is to do “nothing”.
“The number one thing you should do if you come into a lot of money is to do nothing,” Glen James, host of My Millennial Money podcast and former financial adviser, told 7Life.
“Sit on it for three to six months – nothing is urgent.
“Don’t change your spending, don’t quit your job, don’t change your lifestyle overnight.”
James explains the worst thing you can do is start spending the minute the money hits your bank account.
“It is the trap that lottery winners fall into,” he explains.
“The more you consume, the quicker it will run out.
“You need to calculate how you want to live and how much money you need to live.”
The former financial adviser suggests providing yourself with a monthly wage from the winnings, ensuring that “cash flow in” is meeting “cash flow out”.
“When you act rich and you consume money like the rich, you will run out of it,” he says.
“There is a difference between being wealthy, with money coming in, and rich.”
James warns that many individuals who fall into riches overnight will lose their money in five years due to poor planning.
Apart from seeking expert financial advice, he urges new millionaires to calculate the running costs of big-ticket items before making the plunge.
However, many regular lotto players disagree with the experts, providing their own commentary on social media.
“Life is short. Spend it while you can and enjoy life,” one wrote.
“I would be doing the same,” supported another.
“He can’t take it with him when he dies. If he goes broke oh well he had fun doing it. His choice,” one said.