Mark Cuban to lottery winners: Don't invest the money—put it in the bank

Lottery officials say someone in South Carolina bought a winning ticket for the $1.6 billion Mega Millions jackpot, the largest in history.

Mark Cuban, self-made billionaire and star of ABC's "Shark Tank," offers that and other winners a word of advice: Put the money in the bank.

"You don't become a smart investor when you win the lottery," Cuban told the Dallas Morning News in 2016. "Don't make investments. You can put it in the bank and live comfortably. Forever."

While it might be tempting to try and multiply your earnings, "you will sleep a lot better knowing you won't lose money," Cuban says. It's always risky to try and time the market and, if you go that route, you could end up losing everything.

To protect your earnings from inflation, you could consider putting some of them in a low-cost index fund, which is a passive and safer investing option. Cuban himself recommends index funds: He told Hayman Capital Management founder Kyle Bass that if you aren't familiar with the markets, the best way to invest your money is to put it into a cheap S&P 500 SPX fund, MarketWatch reports.

The Mega Millions winner or winners have a choice between receiving a lump sum of about $877.8 million in cash or about $1.537 billion paid out in 30 installments, minus taxes. 

To further protect yourself against human error if you win the jackpot, Cuban says not to take the lump sum: "You don't want to blow it all in one spot." Instead, opt for the annuity plan.

His fellow "Shark Tank" investor Kevin O'Leary has a different suggestion: "Take the lump but don't spend it," O'Leary tells CNBC Make It. "Pay yourself an annuity and put the excess cash flow to work for you. More money up front means more money to invest and grow."

Either way, both men say, use caution and go slow. 

Once your earnings are secure, take care of your outstanding financial needs before going on a shopping spree.

"Pay off all high-interest debt immediately, and then tackle the rest of your debt," Rich Ramassini, a certified financial planner and director of strategy and sales performance at PNC Investments, tells CNBC Make It. "The remaining funds can be used for your daily living expenses and put aside for expected future purchases."

Then let yourself live a little. "After you have met all other obligations and consulted a team of professionals, feel free to spend a bit on a dream vacation or a new car," Ramassini says.

Whatever you choose to do, remember that your life is about to change. "If you were happy yesterday, you are going to be a lot happier tomorrow," Cuban told the Dallas Morning News. "Life gets easier when you don't have to worry about the bills."

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