I recently took a poll asking people whether they’d rather have $1,000,000 today or $4,000 per month, adjusted for inflation, for the rest of their lives. Out of 893 votes, a surprising 523 chose the $4,000 per month option, while only 370 went for the $1,000,000 upfront. It’s clear that the steady, predictable income sounds appealing to most. But here’s the thing: the math shows that this choice actually leaves money on the table. Let’s break down why the $1,000,000 today is the smarter move.

### The Case for the Lump Sum and Index Funds

If you take the $1,000,000 today, you get control over a significant amount of money that you can invest right away. Let’s say you invest it in a diversified index fund, like the S&P 500, which has historically returned about 7-10% annually after adjusting for inflation. To keep things simple, let’s use a conservative estimate of 7% annual returns.

#### What Happens with the $1,000,000 Investment?

**Initial Investment**: $1,000,000**Annual Return**: 7%

With a 7% annual return, your $1,000,000 would nearly double in 10 years.

After 10 years, your investment grows to around $1,967,151. In 20 years, this figure balloons to approximately $3,869,684.

Now, let’s consider the $4,000 per month option.

### The Monthly Payment Scenario

If you choose $4,000 per month, that adds up to $48,000 per year. Adjusted for inflation, this amount retains its purchasing power, but it doesn’t grow beyond that. Even if you decide to invest each $4,000 payment as you receive it, you’ll be at a disadvantage because you’re investing smaller amounts gradually rather than a larger lump sum upfront.

Let’s assume you invest each $4,000 monthly payment with the same 7% return.

**Monthly Investment**: $4,000**Annual Return**: 7% (compounded monthly)

After 10 years, the future value of these monthly investments would be about $688,957. After 20 years, it would grow to approximately $1,911,603.

### Comparing the Two Scenarios

After 20 years, the lump sum investment would grow to around $3,869,684, while the monthly payments invested similarly would only reach about $1,911,603. **Even over a longer period, the $4,000 per month option never catches up to the growth potential of the $1,000,000 invested upfront. **The reason is simple: compound interest works best when it has a larger principal amount to grow from the start.

The $1,000,000 upfront is the clear winner because it allows you to leverage the power of compound growth right from the beginning. In contrast, the $4,000 per month will always lag behind, even if invested at the same return rate. By taking the million dollars today and investing it wisely, you maximize your financial potential, leaving the $4,000-a-month option far behind.