Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Jackpot

What it is:

A jackpot is a big winning -- often the largest a competition or event has to offer.

How it works (Example):

Let's say John Doe goes to Las Vegas to get away from his wife for a few days. He puts a few dollars in a slot machine and pulls the handle. Three red cherries pop up, lights start flashing, and music starts playing. John has won a $250,000 jackpot -- the largest payout the slot machines offer. He collects his winnings and leaves his wife, who later sues him for half.
 

Why it Matters:

In the finance world, a jackpot is similar to a windfall -- it is an amount of money that is usually unexpected and usually very large. Jackpots can be the result of investing in IPOs that do well, holding onto a stock that everybody else left for dead, or investing in assets that were undervalued.

Note, however, that when you win a jackpot, the IRS does too -- income is taxable, regardless of whether it was expected.