Investing inside the Lottery over Mutual Funds???

Even though I am not a good investment advisor and don't hold myself out together, clients continue to ask me what to do to get ready for retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more within my profit sharing plan or monthly pension?



Contrary to popular belief, none of those are wise investments. Why? Among other reasons, each of them involve putting money into a smart investment vehicle over which they've little control concerning investment and timing and most people end up choosing Mutual Funds his or her investment within diets. In fact, putting your dollars into the Lottery would be a better investment.



Really? The Lottery as a good investment vehicle? Sound crazy? Gamble my retirement funds away in the government-sponsored game of chance where I have little chance of winning? Where millions of other folks are putting in cash in hopes of winning the big one? Where most of the money visits someone else as well as the chances are strong that I will forfeit part or most of my money?



Wait a minute - am i talking now regarding the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little chance of winning. Sounds like similar to Mutual Fund investment in the 401(k) or IRA. After all, exactly what are my odds of retiring on Mutual Fund investments? Not very high, actually.



A couple of years ago, I was hearing a financial program about the radio on my way into work. The interviewer was asking the representative of a sizable Mutual Fund regarding the performance of the Fund. The Rep responded that this Mutual Fund had risen in value by around 20% annually for the prior 2 yrs. But if the interviewer asked in regards to the average return to the common investor within the Fund, the Rep responded how the average investor had actually lost 2% per year. Why? Because from the timing of going in and out of the market. Compare this for the Lottery, where everybody knows the exact chances of winning along with the exact amount that might be won!



But what regarding the great tax features of putting my money in a 401(k) or perhaps an IRA? Yeah, right! Get a tax deduction when you are young and in the relatively low tax bracket so that you can pay taxes around the money you're taking out when you find yourself retired and in a higher tax bracket? Yeah, this is a good deal. Or, look at the difference in tax rates on capital gains and dividends if you are not inside a 401(k) or IRA versus the standard income tax rates about the earnings if you pull them out of your 401(k) or IRA.



So congratulations, you are thinking that you ought to just spend money on Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds lead to capital gains taxes once the Fund Managers trade them even though you don't see the money! You have to pay taxes however the Fund may actually have gone down in value! And what concerning the lost opportunity price of that money that you will be now paying in taxes that you might have place into other investments? At least while using Lottery, you know the exact amount of taxes you can expect to pay should you win and also you only have to pay taxes in the event you do win.



Yes, you say, nevertheless the Lottery is gambling and I haven't any control over whether I win or lose. You are right. The Lottery is gambling. But same goes with a Mutual Fund. You haven't any control over the stock market and neither does the Fund Manager. The market fails, does your Fund. At least you recognize that you will be gambling when you play the Lottery. You don't have the government, finance institutions and your employer telling you how the Lottery is an excellent investment. And your employer doesn't go so far concerning match the sum you put in to the Lottery like it might using your 401(k). Nobody is lying to you about the Lottery being gambling, but those invoved with positions of authority are lying to you in regards to the chances of success in a very Mutual Fund!



But surely, you say, there is a better potential for making money in a very Mutual Fund than there is inside Lottery? Hardly. There may be less of a probability of losing most of the money you put in a Mutual Fund than there's losing all of the money you put into the Lottery. But you are never likely to win big in the Mutual Fund. In fact, Mutual Funds are meant to minimize your returns by making a "balanced portfolio." If they could minimize your risk with the market itself, this might be okay. But the problem is the fact that nobody can minimize the risk with the market without sophisticated hedge strategies which are not typically utilized in Mutual Funds. At least while using Lottery, you have a possibility of winning big. And you can sleep in the evening, as you aren't wondering if the probability of winning 're going down overnight as a result of something that is situated Tokyo.



You say you don't like the idea that most of your Lottery gamblings 're going to support government programs? Where do you think most of the earnings from a Mutual Fund are inclined? No, not to support government programs, but instead to support your investment advisor's and also the Mutual Fund manager's retirement? You take all of the risk, you set in most of the capital, but the majority of the earnings from the Mutual Fund go for the Fund manager as well as your investment advisor. At least while using Lottery, the funds 're going to worthy causes, such as the Arts.



Of course, I would never advise complaintant to rely about the Lottery for their retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is much more fun and at least I know I'm gambling. But if you want to retire, examine other investments and help someone who will website to put inside time to assist you retire soon and retire rich. Financial freedom can be obtained to those who are willing to work and understand it, although not likely in case you want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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